UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


GIFT   OF   CAPT.   AND    MI 
PAUL  MCBRIDE  PERIGO] 


UNIVERSITY  of  CALIFOKNlA 

AT 

LOS  ANGELES 

LIBRARY 


> 


PEACE  AND  BUSINESS 


BY  THE  SAME  AUTHOR 

s.  o.  s. 

America's  miracle  in  France 

THE  BUSINESS 
OF  WAR 

THE  REBIRTH 
OF  RUSSIA 

THE  WAR  AFTER 
THE  WAR 

LEONARD  WOOD: 

PROPHET  OF  PREPAREDNESS 


-/<  j^.U.  ^z: '     ''-- ,.  '  O' ' 


From  a  Poylrciit  by  F.  IValter  Taylor 


Isaac  F.  Marcosson 


PEACE 

AND    BUSINESS 


BY 

ISAAC  F.  MARCOSSON 


^ 


>     '     >       , 


.         ■ 


NEW  YORK:  JOHN  LANE   COMPANY 

LONDON:  JOHN  LANE,  THE   BODLEY  HEAD 

MCMXIX 


X  O  U  ':t  O  b 


COPYEIOHT,  1910,  BY  ThE  CorTIS  PuBUSHING  COMPANY 


Copyright,  igig, 
By  JOHN  LANE  COMPANY 


«  ^  •      •  •  • 


•  •  C  « 


<     4 
t     t      < 


•    -         •"        « 


•      •       •  t»*       «• 


Press  of 

J.  J.  Little  &  Ives  Company 

New  York,  U.  S.  A. 


I 


TO 

BRIGADIER  GENERAL  CHARLES  G.  DAWES 

WHO  REVEALED  IN  WAR,  AS  IN  PEACE,  THE  HIGH 

SPIRIT  AND  INDOMITABLE  COURAGE 

OF  AMERICAN  BUSINESS 


FOREIFORD 


THERE  was  a  time  when,  amid  the  shock  of  war, 
the  world  deluded  itself  with  the  idea  that  hos- 
tilities would  cease  with  the  dawn  of  peace. 
Peace  has  come  but  there  is  no  end  of  war.    Another 
struggle — as  bitter  as  it  is  bloodless — ^holds  the  boards. 
It  is  the  race  for  economic  rehabilitation. 

But  this  battle  of  the  market-place  is  subsidiary  to 
that  larger  class  war  which,  in  some  respects,  is  the 
deadliest  and  most  vicious  by-product  of  the  mighty 
effort  to  overthrow  German  militarism.  I  mean,  of 
course,  the  red  terror  masquerading  as  Bolshevism 
which  has  crystallized  all  the  forces  of  unrest  so 
long  arrayed  against  capital  and  order.  Social 
idealism  is  not  among  the  fruits  of  victory.  Thus 
the  dawn  of  an  era  which  should  proclaim  peace  and 
goodwill  is  clouded  with  trouble  and  ashiver  with  ap- 
prehension as  to  what  the  morrow  may  bring  forth. 

Just  as  the  Peace  Treaty  readjusted  the  map  of  the 
universe  so  did  it  decree  a  whole  new  commercial 
order.  The  indemnities  and  limitations  placed  upon 
Germany  not  only  sterilize  her  vast  trade  aspirations, 
for  the  time  at  least,  but  likewise  create  in  every 
Allied  country  of  importance  the  desire  to  annex  the 
business  domain  that  once  was  hers. 

7 


8  FOREWORD 


In  that  new  struggle  for  international  economic 
supremacy  America  has  a  large  stake.  She  was  the 
deciding  factor  in  the  war.  If  she  capitalizes  the 
lessons  that  she  has  learned  she  can  be  an  arbiter  of 
peace.  The  whole  world  looks  to  us  for  leadership 
just  as  it  turned  to  us  for  succor  during  the  ravening 
years.  The  next  twelve  months  will  decide  whether 
we  will  be  able  to  maintain  our  far-flung  authority. 

This  book,  which  is  the  result  of  much  war-time 
travel  and  investigation,  points  out  some  of  the  difficul- 
ties, and  likewise  paints  some  of  the  opportunities  that 
lie  in  the  way  of  a  consummation  which,  if  achieved, 
means  much  to  our  future  prosperity.  The  time  of 
test  has  come. 

I.  F.  M. 
New  York,  July,  ipip. 


CONTENTS 


CHAPTER                                                                                 .  PAGE 

I.  The  New  Britain 13 

11.  France  and  the  Future  ...  69 

III.  Holland  and  World  Trade  .     .  115 

IV.  Switzerland  the  Buffer  State  144 
V.  The  German  in  Spain      .     .     .  182 

VI.  The  New  Italy 203 

VII.  Can  Germany  Come  Back?  .     .  243 

VIII.  America's  Opportunity    ...  275 


PEACE  AND  BUSINESS 


I — The  New  Britain 


ON  that  fateful  November  Monday  in  1918  when 
a  few  scrapes  of  the  pen  at  Marshal  Foch's 
Headquarters  on  Wheels  dispelled  Germany's 
dream  of  world  conquest  another  event,  unheralded 
and  unrecorded  yet  big  with  significance,  occurred  in 
the  office  of  Sir  Joseph  Maclay,  the  British  Shipping 
Controller,  that  stands  amid  the  trees  and  flowerbeds 
at  St.  James'  Park  in  London.  Before  the  riot  of  joy 
over  the  Teutonic  surrender  had  gotten  under  full 
swing  along  the  Strand  and  in  Piccadilly  the  wiry  little 
Scotchman,  who  rose  from  mate  to  magnate  and  who 
ruled  the  war-time  British  Mercantile  Marine,  took  a 
typewritten  sheet  from  a  pigeon-hole  in  his  desk, 
pressed  a  button,  and  the  cables  began  to  flash  orders 
to  the  remotest  ends  of  the  Empire.  They  directed 
ships  in  Australian  ports  to  load  with  mutton  and 
metal  instead  of  troops;  they  instructed  vessels  at  East 
Indian  docks  to  take  aboard  rice  and  rubber  in  place 
of  coolies;  they  commanded  transports  tied  up  at 
Canadian  wharves  to  substitute  cargoes  of  wheat  for 
fresh  drafts  of  men. 

That  typewritten  sheet  was  like  the  famous  mobili- 

13 


14  PEACE  AND  BUSINESS 

zation  order  which  Von  Moltke  kept  in  his  desk  and 
which  needed  only  the  alarm  of  war  to  be  vivified  into 
the  clarion  call  of  a  mighty  host.  It  was  the  "Turn- 
around" of  British  Tonnage  Allocation  from  war  to 
peace  needs.  For  months  it  had  reposed  quietly  in 
the  pigeon-hole  in  St.  James'  Park  awaiting  the  Great 
Day  of  Deliverance  when  it  would  be  the  first  trumpet 
call  to  the  New  Order.  Compiled  with  the  coopera- 
tion of  the  Ministry  of  Reconstruction  it  constituted 
the  imperial  reply  to  the  momentous  question:  "How 
shall  we  face  restoration  ?"  that  then  trembled,  and  will 
continue  to  tremble  on  the  lips  of  the  nations  that  went 
to  war.  It  meant  that  with  tonnage,  master  weapon 
in  peace  as  well  as  in  war,  England  was  ready. 

In  this  swift  transition  you  get  a  hint  of  British 
preparedness  for  the  colossal  task  that  will  test  the 
resources  of  civilization  during  the  next  twelve  months. 
With  the  possible  exception  of  Germany,  who  began 
her  reconstruction  plans  on  the  day  she  invaded  Bel- 
gium, no  other  country  that  has  borne  the  ordeal  of 
fire  is  so  well  equipped  to  meet  the  equally  trying  and 
more  permanent  problem  of  recoverery  as  the  heroic 
ally  whose  Grand  Fleet  saved  the  world,  and  who 
speaks  our  mother  tongue.  It  is  with  her,  and  her 
alone,  that  we  must  reckon  in  the  bloodless  struggle 
for  the  universal  trade  supremacy  which  will  rival  the 
conflicts  of  the  crimsoned  fields  in  scope,  vigor  and 
determination. 

With  no  other  phase  of  European  economic  recon- 
struction are  we  so  vitally  concerned  as  with  the  Brit- 
ish.    Nor  is  it  entirely  due  to  the  kinship  of  a  common 


THE  NEW  BRITAIN  15 

race  heritage  or  the  comradeship  of  the  battle  hne 
where  the  Anglo-Saxons  fought  together.  We  also 
fought  in  France  and  with  France;  our  dead  sleep 
beneath  her  war-gashed  soil.  But  our  deep,  senti- 
mental and  abiding  association  with  France  is  not  com- 
parable with  the  bond  with  Britain,  for  the  reason  that 
the  safety  and  the  integrity  of  the  whole  economic 
future  depend  upon  the  way  England  and  America  act 
toward  each  other.  They  will  control  the  bulk  of  raw 
materials;  they  will  dominate  cargo  carrying;  their 
alliance,  which  must  not  necessarily  be  entangling, 
will  mean  that  world  trade,  like  democracy,  will  be 
safe.  They  will  inevitably  clash  in  spirited  competi- 
tion but  it  must  be  a  straight,  stand-up,  fair-play  duel 
between  giants,  and  lacking  the  poisonous,  pernicious 
penetration  upon  which  Germany  reared  her  one-time 
commercial  authority.  Thus  the  whole  British  pro- 
gram of  recovery  is  of  vital  interest  and  importance  to 
America  as  she  stands  on  the  threshold  of  a  whole  new 
world  destiny. 

I  have  had  an  exceptional  opportunity  to  watch  its 
development.  Since  191 5  I  have  commuted  pretty 
regularly  across  the  Atlantic.  Year  after  year — some- 
times twice  within  the  twelvemonth — I  ranged  the  war- 
ring and  neutral  lands.  More  especially  in  the  bel- 
ligerent countries  I  began,  almost  from  the  start,  to 
look  for  some  realization  of  the  immense  responsibili- 
ties that  would  come  with  peace.  Nowhere  else  did 
this  realization  dawn  so  early  as  in  England ;  nowhere 
else  has  it  reached  such  high  fruition.  In  the  midst 
of  a  war  that  sapped  her  vitality  she  looked  steadily 


i6  PEACE  AND  BUSINESS 

and  confidently  ahead  to  readjustment  and  recupera- 
tion. 

British  Reconstruction  has  been  an  evolution.  In 
the  earlier  days  of  the  conflict  the  average  Englishman 
regarded  peace  merely  as  a  return  to  the  comfortable 
pre-war  conditions.  He  wanted  as  little  friction  as 
possible  in  the  slide-back  to  normal.  To  him  it  simply 
meant  the  renewal  of  old  habits,  traditions,  prejudices 
and  controversies.  This  amiable  ambition  was  full 
brother  to  the  conviction  that  the  war  was  "a  sporting 
proposition  and  would  be  over  by  Christmas." 

But  the  might  of  German  Militarism  as  revealed  on 
the  field  of  battle,  coupled  with  the  depth  of  German 
economic  penetration  as  disclosed  by  the  almost  pa- 
thetic dependence  of  British  industry  on  certain  essen- 
tial German  products — a  dependence  that  handicapped 
munitions  making — jolted  this  complacent  state  of 
mind.  Britain  woke  up  to  the  fact  that  to  beat  the 
German  in  war  she  must  be  economically  free.  She 
turned  to  the  task  with  a  mighty  energy.  This  eco- 
nomic freedom  which  was  the  burden  of  her  whole 
war  effort  is  likewise  the  crux  of  her  Reconstruction 
Creed. 

Like  all  big  ideas  Reconstruction  was  harried  and 
abused.  The  "After-the-War"  vision  became  a  sort 
of  fetish  that  attracted  both  the  demagogue  and  the 
dreamer.  Back  in  the  first  year  of  the  war  when  the 
so-called  Reconstruction  Committee  of  the  Cabinet  was 
the  lone  outpost  of  Restoration  the  maelstrom  of  dis- 
cussion started  to  swirl.  Everybody  had  a  theory.  I 
listened  to  floods  of  impassioned  oratory  about  German 


THE  NEW  BRITAIN  17 


trade  menace ;  I  saw  the  black  flag  of  economic  boycott 
against  the  enemy  powers  reared  over  the  Paris  Eco- 
nomic Conference;  I  followed  the  lurid  threats  of 
trade  reprisal  that  ran  like  a  prairie  fire  through  the 
columns  of  the  sensational  British  press. 

Much  of  this  verbal  conflagration,  which  was  as 
unsound  and  impractical  as  it  was  violent,  subsided. 
But  it  showed  one  thing,  and  it  did  another.  The  first 
was  the  fact  that  England  was  awake  to  her  post-war 
obligations;  the  second  was  the  organization  of  the 
Ministry  of  Reconstruction,  established  by  Act  of  Par- 
liament in  1 91 7  with  the  Right  Honorable  Christopher 
Addison,  M.D.,  as  Minister. 

Britain  demobilized  her  army  by  trades  and  not  by 
units,  the  essential  industries  having  first  call.  The 
scheme  set  up  employment  bureaus  in  the  various 
Labor  Exchanges  throughout  the  country;  it  estab- 
lished a  clearing  house  of  machinery  and  a  card  index 
of  industrial  needs  both  human  and  material. 

Back  of  it  was  something  bigger,  which  bore  directly 
on  the  present  crowded  hour  when  the  economic 
wounds  of  the  world  are  being  bound  up.  It  was  the 
intelligent  understanding  by  England  that  organized 
industrial  preparation  is  more  effective  than  reckless 
threat  of  boycott,  that  it  is  impossible  to  legislate  a 
people  like  the  Germans  out  of  business,  for  the  reason 
that  individuals  and  not  nations  carry  on  commerce; 
that  it  is  not  economic  destruction  that  will  sterilize 
the  trade  world  against  the  Teuton  but  an  economic 
security  against  his  aggression  reared  in  the  shape  of 
a  huge  output.     England  decided  that  the  best  com- 


i8  PEACE  AND  BUSINESS 

mercial  antidote  against  Germany  was  to  make  it  dif- 
ficult and  costly  for  her  to  do  business  in  the  future; 
to  wipe  out  her  monopoly  of  the  key  industries  and 
to  make  future  penetration  impossible.  Her  Recon- 
struction program  is  the  common-sense  dramatization 
of  all  this  and  considerably  more.  It  is  the  goal 
toward  which  the  Compass  of  Recovery  is  set. 

Just  as  she  reduced  war  to  a  business,  rehearsed 
offensives  like  the  acts  of  a  stupendous  play;  charted 
and  diagramed  the  process  of  Army  Supply  and  Trans- 
port— so  has  she  put  down  on  paper  the  whole  Strat- 
egy of  Restoration.  It  was  a  going  concern  before 
the  Te  Deum  for  Victory  sounded  in  St.  Paul's.  What 
is  the  result?  To-day,  while  the  rest  of  the  world 
that  went  to  war  is  furrowing  the  fields  in  which  to 
plant  the  seeds  of  renewal,  England  is  ready  to  garner 
a  crop.     Preparedness  always  pays. 

Though  prophecy  is  as  dangerous  a  dissipation  in 
peace  as  in  war  no  man  who  has  touched  British  Re- 
construction can  have  any  other  conviction  than  that 
the  Empire,  and  more  particularly  England,  will  re- 
cover quickly  and  with  an  abundant  prosperity,  despite 
the  burden  of  debt,  taxation  and  the  inevitable  labor 
complications.  In  this  case  history  will  be  repeating 
itself.  War  means  revelation,  and  revelation  in  turn 
invariably  spells  expansion.  Great  Britain's  real  de- 
velopment came  after  the  long-drawn  struggle  with 
Napoleon ;  the  United  States  emerged  reborn  from  the 
crucible  of  civil  strife  in  the  Sixties;  Prussia  and 
France  became  world  powers  with  the  sheathing  of  the 
sword  in  1871.     Long  before  Hindenburg  and  Luden- 


THE  NEW  BRITAIN  19 

dorff  passed  into  the  twilight  of  the  German  military 
gods  the  rebirth  of  Europe  had  begun. 

There  are  two  phases  of  British  Reconstruction: 
One  is  the  vast  paper  program  involving  the  demobili- 
zation of  army  and  war  industry  with  all  their  allied 
upkeep  and  renewal,  which  was  translated  into  actual- 
ity on  Armistice  Monday,  as  the  incident  in  Sir  Joseph 
Maclay's  office  showed;  the  other  is  the  reorganiza- 
tion and  development  of  Production  under  the  spur 
of  war  need,  which  turned  to  peace  with  full  power  on. 
It  is  expressed  in  a  speeded-up  output,  a  trained,  disci- 
plined and  sophisticated  people  who  know  themselves 
and  their  jobs  better  than  ever  before,  and  in  the  de- 
termination to  expand  and  conserve  the  imperial  re- 
sources with  every  safeguard,  including  a  tariff,  that 
can  be  set  up.  With  peace  Britain  unfurled  the  ban- 
ner of  Self-Sufficiency  from  the  mast-head  of  Empire. 
What  is  she  doing?     What  does  she  propose  to  do? 

Before  we  can  analyze  this  huge  scheme  of  Restora- 
tion we  must  first  see  what  those  four  years  of  strife 
taught  England.  No  one  need  be  told  at  this  late 
date  that  War  is  the  Supreme  Revealer.  It  bared  the 
soul  of  Britain.  Not  all  the  disclosure  was  pleasant 
but  most  of  it  has  proved  profitable.  It  is  one  of  the 
compensations  of  the  war.  Under  the  lash  of  neces- 
sity— which  in  the  great  struggle  was  nothing  more 
nor  less  than  self-preservation — England  found  out 
that  she  had  permitted  the  German  to  thrive  like  a 
mushroom  in  her  midst,  sap  the  lifeblood  of  vital  in- 
dustries, and  make  himself  practically  indispensable  to 
the  productive  well-being  of  the  nation.    She  likewise 


20  PEACE  AND  BUSINESS 

discovered — as  the  myriad  rejections  for  army  service 
showed — that  her  population  was  badly  nourished,  and 
housed  still  worse.  A  third  disclosure  was  that  her 
industry  was  disorganized  and  was  an  easy  target  for 
attack. 

On  the  other  hand  she  learned  before  a  year  of  war 
had  registered  its  bloody  progress  that  she  could  in 
time  become  self-sufficient;  that  the  ill-nourished  Cock- 
ney could  be  developed  into  a  "first-class  fighting 
man ;"  that  her  women  were  a  great  asset  in  toil ;  and 
that  her  industry  could  not  only  be  coordinated  but 
could  fill  up  the  gaps  made  by  the  loss  of  those  German 
essentials  to  manufacture.  In  this  Knowledge  Eng- 
land has  found  Power.  It  has  been  the  lever  by  which 
she  has  lifted  herself  to  the  heights  of  a  new  world 
economic  authority.  A  land  of  detached  factories  has 
become  a  continuous  workshop  athrob  with  "the  hum 
of  mighty  workings."  The  wise  always  profit  by  their 
mistakes.  England  has  been  wise.  She  is  not  only 
reconstructing  herself  but  making  the  world  a  better 
place  to  live  in. 

England  turned  from  war  to  peace  with  an  ease  that 
upset  all  theories.  Let  me  illustrate  with  a  personal 
experience.  All  through  my  incessant  war  wander- 
ings I  had  wondered  where  I  would  be  when  the  end 
came.  I  fancied  myself  at  the  Front,  where  a  sudden 
lull  would  succeed  the  deadly  din  of  death;  again  I 
had  a  mental  picture  of  some  Allied  capital,  where  the 
long  night  of  suspense  would  merge  into  the  daybreak 
of  wild  rejoicing.     Neither  of  these  happened. 

On  the  morning  of  November  eleventh  I  was  in 


THE  NEW  BRITAIN  21 

Boulogne  having  come  by  the  night  train  from  Paris. 
Three  days  before  I  had  stood  on  the  shores  of  Lake 
Constance  in  Switzerland  and  looked  down  on  Ger- 
many and  Austria  with  the  home  of  the  Zeppelins 
straight  ahead  of  me.  Now,  on  what  will  always  be 
one  of  the  "mornings  of  the  world,"  I  was  in  the 
French  city  that  four  years  of  war  had  almost  com- 
pletely Anglicized.  It  had  been  one  of  the  chief  ports 
of  arrival  for  British  troops,  and  the  point  of  debarka- 
tion of  the  sick  and  wounded.  Year  after  year  I  had 
seen  it  nervous  with  energy,  shaken  by  the  weight  of 
guns — a  continuous  procession  of  khaki  that  repre- 
sented the  two  extremes  of  war. 

But  on  this  Novemebr  morning,  as  if  In  the  antici- 
pation of  the  great  event  that  impended,  it  had  a  new 
atmosphere.  Transports  swung  lazily  in  the  harbor, 
the  destroyers  that  had  kept  up  their  eternal  vigil  nosed 
along,  the  quay  that  had  resounded  with  the  tramp  of 
millions  was  almost  deserted.  Peace,  like  those  fa- 
miliar "coming  events,"  seemed  to  have  cast  its  bene- 
diction before.  At  ten  o'clock  I  boarded  the  British 
Military  Leave  Boat  that  crossed  twice  daily  to  Folke- 
stone. It  was  packed  with  officers  and  enlisted  men 
going  home  on  furlough.  Half-way  across^ — literally 
in  "Mid-Channel,"  where  the  lady  in  the  famous 
Pinero  play  of  that  name  made  the  tragic  decision — a 
long  gray  patrol  boat  came  dashing  up,  a-flutter  with 
flags  and  with  her  sirens  shrieking.  She  brought  the 
news  that  the  armistice  was  signed.  Thus  on  the 
waters  that  had  borne  the  burden  of  so  much  war 
agony  and  between  the  two  great  nations  joined  by 


22  PEACE  AND  BUSINESS 


bonds  of  blood  and  sacrifice  I  heard  the  great  news. 

Now  for  the  real  reason  for  the  intrusion  of  this 
incident.  Practically  every  man  on  that  boat  except 
a  few  diplomats  and  I  had  carried  arms,  and  most  of 
them  wore  wound  and  service  stripes.  All  had  come 
straight  from  the  Front.  Yet  they  scarcely  turned  a 
hair  at  peace.  Nor  was  it  the  traditional  British  im- 
perturbability. There  were  scores  of  overseas  troops 
in  the  crowd,  who  lack  the  casualness  of  the  Mother 
Country.  The  temporary  colonel,  who  sat  in  a  deck 
chair  at  my  left  and  who  had  left  his  coal  mine  in 
Wales  to  join  up  blew  a  ring  of  smoke  into  the  crisp 
autumn  air  and  said :  'Til  soon  be  getting  back  to  the 
underground  again."  The  rosy-cheeked  captain  with 
the  blue-and-white  ribbon  of  the  Military  Cross  on 
his  breast,  who  had  done  nothing  more  exciting  than 
add  up  accounts  in  a  Manchester  factory  before  he 
began  to  kill  Germans,  remarked :  "I  wonder  when  I'll 
be  back  on  my  old  job  again" ;  while  the  grizzled  old 
major,  whose  two  boys  lay  beneath  the  ruins  of  Ypres, 
growled  and  said :  "I've  got  to  get  an  active  job  some- 
where." Everyone  accepted  the  stupendous  change  as 
a  matter  of  fact,  and  his  first  idea  was  to  wonder  what 
he  was  going  to  do  next. 

That  afternoon  I  entered  a  drenched  but  delirious 
London,  where  the  tumult  made  the  Ma f eking  revel 
seem  like  a  far-away  whisper.  Before  night  fell  like 
a  wet  blanket  over  that  hysterical  metropolis  the 
lights  were  gleaming  in  the  War  Office,  the  Admiralty 
and  the  Ministry  of  Shipping.  These  dynamos  of  de- 
struction had  become  almost  in  an  hour  the  main- 


THE  NEW  BRITAIN  23 


springs  of  renewal.  The  business  of  war  had  ended 
and  the  business  of  peace  was  at  hand.  Contracts  had 
to  be  canceled  and  the  new  battle  line  of  rehabilitation 
set  up.  At  the  Ministry  of  Reconstruction,  which  had 
waited  like  a  runner  at  the  tape  ready  for  the  crack  of 
the  starter's  pistol,  the  machinery  was  started,  and  the 
work  of  recovery  began. 

Wherever  you  turned  in  London  during  those  stir- 
ring days  you  found  that  the  popular  mind  realized 
the  new  responsibilities  of  the  nation.  I  met  a  famous 
cinema  director  in  the  Strand.  He  had  been  at  work 
on  a  war  film.     I  asked  him  how  his  project  was  going. 

Quick  as  a  flash  he  replied :  "That  story  is  scrapped. 
I  have  started  a  big  reconstruction  story." 

Even  the  taxicab  drivers  caught  the  spirit  of  change. 
Before  the  armistice  they  regarded  it  as  a  condescen- 
sion to  convey  you,  and  a  war-born  privilege  to  over- 
charge. Now  they  suddenly  became  human,  took  you 
where  you  wanted  to  go  without  question,  and  even 
smiled  upon  the  one-time  supplicants  for  their  favor. 
Reconstruction  was  not  without  its  miracles ! 

England  not  only  had  the  mood  for  reconstruction 
but  she  also  had  the  tools.  First  and  foremost  was 
her  Ministry  of  Reconstruction,  which  was  a  glorified 
congress  of  experts  who  represented  the  social,  eco- 
nomic and  industrial  backbone  of  the  country.  The 
moment  the  German  collapse  occurred  Doctor  Addison 
announced  an  advisory  council  consisting  of  a  panel 
of  men  and  women  of  wide  experience  and  distinction 
in  every  one  of  the  many  activities  that  relate  to  recon- 
struction.    This  council  is  divided  into  five  sections, 


24  PEACE  AND  BUSINESS 

each  one  having  a  chairman  and  a  vice  chairman. 
These  chairmen  and  vice  chairmen  constitute,  with  the 
minister,  what  might  be  termed  the  board  of  directors 
of  the  corporation  of  reconstruction.  They  meet  two 
or  three  times  a  week  and  keep  abreast  with  the  march 
of  events. 

The  functions  of  the  various  sections  give  you  an 
idea  of  what  the  ministry  is  doing.  Section  One  is 
devoted  to  finance  and  transport;  Number  Two  deals 
with  production  and  commercial  organization;  Three 
with  labor  and  industrial  organization ;  Four  with  rural 
development,  including  agriculture;  and  Five  is  con- 
cerned with  social  development,  which  embraces  edu- 
cation, health  and  housing.  There  is  also  a  subsidiary 
women's  advisory  committee.  The  wide  range  of 
these  activities  shows  that  with  material  recovery  goes 
a  social  rejuvenation,  which  will  make  the  nation 
healthy  and  comfortable  and  therefore  happier  and 
more  efficient.  It  is  a  big  point  in  the  salesmanship  of 
rehabilitation. 

Now  for  the  actual  tools.  The  end  of  the  war  found 
England  with  these  assets:  Her  banking  facilities — 
through  a  series  of  mergers  which  I  will  describe  later 
— were  in  an  ideal  condition  to  foster  industries ;  her 
productive  machine  was  geared  up  to  an  output  never 
dreamed  of  in  a  country  where  restricted  output  was 
the  first  rule  of  manufacture;  her  man  power  and 
woman  power  were  on  the  tiptoe  of  training;  her 
knowledge  of  world-trade  secrets  was  as  complete  as 
four  years  of  censorship  could  make  it;  her  transporta- 
tion system,  from  canals  to  railways,  had  learned  in- 


THE  NEW  BRITAIN  25 

calculable  lessons  in  upkeep  and  coordination ;  the  state 
had  become  the  accredited  partner  of  big  business. 
There  was  a  kindling  sense  of  international  responsi- 
bility that  vied  with  the  physical  fitness  of  the  workers. 

But  this  was  not  all  the  equipment.  Animating  and 
sustaining  British  life  was  the  supreme  lesson  of  thrift 
born  of  the  necessity  of  doing  without  many  things 
that  had  been  regarded  as  indispensable  in  the  years 
of  peace.  The  nation  had  learned  to  serve  by  saving; 
it  had  found  out  the  meaning  of  popular  investment. 
It  was  almost  worth  the  price  of  the  war  in  blood  and 
treasure.  Topping  it  all  was  the  consciousness,  writ- 
ten in  horny  hands  that  had  once  been  work-proof, 
and  in  pleasure-loving  hearts  now  seamed  with  sorrow, 
that  just  as  war  had  meant  work  and  sacrifice,  so  must 
peace  mean  unremitting  toil  and  still  more  sacrifice. 
There  must  be  no  armistices  to  effort ! 

With  the  hushing  of  the  guns  England  realized  that 
however  elaborate  her  reconstruction  plans  might  be 
they  must  guarantee  at  once  two  all-essential  things — ■ 
food  and  employment.  With  the  former  there  was 
practically  no  anxiety.  The  abnegation  of  America, 
combined  with  the  enormous  stores  of  wheat  piled  up 
in  Australia  and  elsewhere  that  only  awaited  shipment, 
solved  this  problem.  The  immediate  release  of  ton- 
nage from  war  work  expedited  the  movement  of  all 
this  grain. 

The  big  job  was  to  deal  with  the  labor  problem, 
which  necessitated  the  demobilization  of  the  millions 
of  workers  in  the  munition  factories  and  other  war 
jvork.     This  emergency  was  met  in  orderly  fashion  by 


26  PEACE  AND  BUSINESS 

doing  two  things:  One  was  to  discharge  those  em- 
ployees who  were  not  industrial  workers  prior  to  tak- 
ing up  munitions  work  and  who  were  willing  to  with- 
draw voluntarily;  the  other  was  to  divert  the  war 
workers  to  their  previous  occupations  or  into  the  new 
industries  that  are  a  part  of  the  imperial  program  of 
self-sufficiency.  Thousands  of  the  women  who  en- 
tered the  factories  during  the  war  came  from  the 
country  and  then  went  back  to  the  land,  where  still 
another  chapter  in  the  story  of  England  self-contained 
is  being  written.  The  Women's  Land  Army  of  war 
became  overnight  the  Women's  Land  Army  of  peace. 
It  means  a  more  intensive  and  a  more  scientific  cul- 
tivation of  the  soil,  which  is  one  of  the  many  com- 
pensations of  four  years  of  blood  and  suffering. 

All  this  is  by  way  of  introduction.  We  can  now 
get  down  to  the  brass  tacks  of  Reconstruction.  The 
British  war  effort  was  reared  on  Industry  expressed 
in  what  we  call  quantity  output.  This  same  institu- 
tion has  become  the  corner-stone  of  the  whole  new 
era  of  recovery.  The  late  war — it  seems  strange  to 
be  writing  of  it  in  the  past  tense — was  a  War  of 
Machinery.  It  was  the  British  workman  pitted 
against  the  German  artisan.  Peace  will  not  change 
this  line-up.  The  only  difference  will  be  in  the  out- 
put. Safety  razors,  typewriters,  adding  machines, 
cash  registers,  motor  cars  in  "massed  manufacture" — 
to  use  a  British  phrase — will  succeed  shells,  guns, 
grenades  and  aeroplanes.  Again  "weight  of  metal" 
will  win. 

In  191 5,  when  I  made  my  first  study  of  British  war 


THE  NEW  BRITAIN  27 


industrial  conditions,  there  were  less  than  a  thousand 
Government-controlled  factories.  On  the  day  the 
armistice  was  signed  there  were  exactly  seven  thou- 
sand. Britain  was  one  vast  mill,  and  unlike  those 
proverbial  mills  of  the  gods  it  did  not  grind  slowly. 
The  problem  was  to  adapt  this  immense  production  to 
peace,  at  once  and  without  dislocation.  How  was  it 
done? 

To  get  the  answer  you  must  first  come  with  me  to 
the  office  of  Winston  Spencer  Churchill,  Minister  of 
Munitions,  in  the  old  Metropole  Hotel  in  London. 
Just  a  year  ago  I  sat  in  that  same  room  and  talked 
with  him  about  the  problems  of  peace.  This  strange 
child  of  destiny  who  at  forty-four  has  had  more  virile 
public  service  than  half  a  dozen  other  statesmen  have 
packed  into  their  lifetimes,  paced  up  and  down  the 
floor  smoking  a  fat  cigar  and  talking  with  dynamic 
energy.  When  I  asked  him  about  Reconstruction  he 
made  one  of  his  characteristic  epigrams,  for  he  said : 
"Let  us  look  after  the  war  now,  and  the  war  after  the 
war  will  take  care  of  itself." 

The  conversation  came  back  to  me  vividly  as  we 
sat  before  the  fire,  with  the  shouts  of  rejoicing  over 
victory  coming  in  from  Whitehall.  Peace  had  ceased 
to  be  a  theory  and  had  become  a  condition.  The  per- 
petual storm  center  of  British  politics — for  Churchill 
is  always  about  to  start  something — felt  the  mood. 

When  I  asked  him  what  he  proposed  to  do  to  pre- 
vent industrial  dislocation  he  gazed  meditatively  into 
the  fire,  pulled  slowly  at  his  cigar  and  replied :  "The 
nation  will  become  the  shock  absorber." 


28  PEACE  AND  BUSINESS 

When  I  asked  him  to  elaborate  he  replied:  "The 
whole  program  of  adjusting  machinery  for  the  muni- 
tions of  peace  is  already  in  operation.  We  have  ar- 
ranged to  dispose  of  half  of  the  government  arsenals 
to  private  manufacturers,  who  have  already  begun  to 
adapt  the  equipment.  A  lathe  remains  a  lathe.  The 
other  government  arsenals  will  be  kept  as  going  con- 
cerns. We  must  be  prepared  for  any  emergency  until 
the  actual  peace  treaty  is  signed." 

Within  a  week  after  the  Kaiser  had  fled  to  Holland 
the  Ministry  of  Munitions  of  war  had  become  in 
reality  a  ministry  of  the  munitions  of  peace.  I  will 
tell  you  why.  When  Doctor  Addison  was  shell 
master  of  England — he  succeeded  Lloyd  George  when 
the  latter  became  Secretary  of  State  for  War  on 
Kitchener's  death — he  established  a  card  index  for 
every  machine  tool  in  the  United  Kingdom.  The 
original  purpose  was  to  release  tools  from  nonessential 
to  essential  work.  That  index  was  also  started  with 
the  idea  of  having  an  inventory  on  hand  when  peace 
came,  when  every  bit  of  machinery  would  be  worth 
as  much  to  reconstruction  as  it  had  been  to  war.  The 
net  result  v/as  that  on  November  twelfth  British  in- 
dustry was  able  to  take  immediate  stock  of  itself  and 
know  precisely  what  it  had  on  hand  to  work  with. 

The  card  index  became  immediately  available  for 
every  British  manufacturer  who,  by  reason  of  the 
nation-wide  pooling  of  machines,  had  a  stake  in  this 
enormous  mass  of  equipment.  Nor  was  it  a  perfunc- 
tory collection  of  dates,  makes  and  numbers.  On 
every  card  was  the  type  of  machine,  its  origin,  make. 


THE  NEW  BRITAIN  29 

capacity  and  condition  on  October  first.  Those  suf- 
fering from  wear  and  tear  were  marked  accordingly. 
Every  machine  that  had  been  scrapped  was  so  indi- 
cated. In  other  words  every  tool  marked  "available 
for  peace  work"  was  ready  to  start  up,  and  it  did. 

On  the  day  after  the  war  ended  the  ministry  began 
to  allot  this  machinery  to  the  new  needs  of  the  coun- 
try. The  small  manufacturer  came  in  on  the  same 
pro-rata  basis  with  a  big  one.  The  supreme  lesson 
of  cooperation,  learned  through  the  stress  of  war  when 
shells  meant  life  and  life  in  turn  meant  the  safety  of 
the  world,  has  been  translated  into  peace,  and  it  can 
only  mean  a  vitalized  and  speeded-up  industry.  The 
ink  was  scarcely  dry  on  the  armistice  before  applica- 
tions for  machinery  began  to  pour  in  on  the  Ministry 
of  Munitions,  and  they  were  filled  without  confusion 
or  delay. 

Now  let  us  see  just  what  constitutes  the  British 
industry  in  process  of  change.  It  falls  into  three 
classes :  One  is  the  straight  war  plant,  built  and  dedi- 
cated to  war  needs,  which  must  be  scrapped  or  must 
undergo  a  complete  transformation;  second  is  the 
peace  industry,  which  was  adapted  to  war,  and  which 
can  be  salvaged  and  restored  to  its  original  work ;  the 
third  branch  is  what  may  be  termed  civil  industry  and 
which  in  the  actual  course  of  war  events  would  have 
remained  idle  during  the  conflict  which  reddened 
Europe. 

This  civil  industry  provides  one  of  the  most  illumi- 
nating examples  of  the  prudence  and  foresight  with 
v^hlch  England  went  about  her  preparations  for  speedy 


30  PEACE  AND  BUSINESS 

reconstruction.  When  the  war  broke  out  there  were 
scores  of  industrial  enterprises  throughout  the  country- 
engaged  in  manufacturing  commodities  not  essential 
to  the  war.  As  most  people  know,  these  industries 
were  pared  down  to  the  bone  and  in  some  instances 
suppressed.  Some  of  them,  however,  contributed 
largely  to  British  export,  were  factors  in  the  foreign- 
exchange  situation  and  were  necessary  institutions. 

Such  an  industry,  for  example,  was  represented  by 
linoleum.  Its  manufacture  requires  the  use  of  linseed 
oil,  which  was  highly  necessary  to  war  work.  Civil 
use  of  this  oil  was  prohibited,  and  it  meant  the  com- 
plete tie-up  of  the  linoleum  output,  which  in  turn 
would  throw  thousands  of  people  out  of  work.  More 
than  this  it  meant  that  the  buying  world  would  find 
a  substitute  for  the  British  article. 

Doctor  Addison  looked  beyond  those  racking  war 
days  to  the  morrow  of  peace.  He  said  to  himself: 
"The  civil  industries  must  be  protected  and  maintained 
in  some  way,  so  that  they  will  be  going  concerns  when 
the  war  ends."  He  appointed  a  Civil  Industries  Com- 
mittee, headed  by  J.  Wormald,  a  Manchester  engi- 
neer, which  worked  out  a  definite  program  for  the 
conservation  of  all  these  activities.  To  use  the  happy 
phrase  coined  by  Doctor  Addison,  the  "potentiality 
of  recovery"  became  the  keynote.  The  committee  de- 
cided that  not  only  were  all  these  civil  industries  worth 
saving  but  that  they  should  also  be  kept  up  to  a  state 
of  operation  and  efficiency  that  would  enable  them  to 
turn  to  their  full  stride  with  peace.  In  the  case  of 
linoleum  a  working  amount  of  linseed  oil  was  alio- 


THE  NEW  BRITAIN  31 

cated  to  the  industry  every  month,  and  in  this  way  it 
was  maintained.  Hence  the  workers  kept  their  jobs, 
the  machines  were  employed,  and  the  town  of 
Kirkcaldy — a  seat  of  the  industry — prospered  instead 
of  going  to  seed.  Instead  of  becoming  discontented 
the  workers  emerged  from  the  war  as  useful  cogs  in 
the  whole  large  national  productive  machine. 

What  was  true  of  linoleum  has  been  true  of  other 
industries.  England  has  kept  the  furnace  fires  burn- 
ing and  it  means  that  she  has  come  into  an  industrial 
authority  that  will  give  her  a  whole  new  world 
prestige. 

These  civil  industries,  however,  contribute  only  a 
comparatively  small  part  of  the  British  output.  The 
bulk  of  British  production  was  harnessed  up  to  war. 
It  follows  therefore  that  the  most  important  phase  of 
transition  has  to  do  with  the  thousands  of  controlled 
plants.  Instead  of  being  paralyzed  through  intensive 
concentration  on  munitions  they  have  already  shown 
that  they  can  make  a  quick  change.  Here  is  a  con- 
crete case. 

I  have  before  me  an  advertisement  that  I  cut  out  of 
the  London  Times.  It  was  headed  A  New  British 
Car.     Under  it  was  printed  the  following: 

"It  is  interesting  to  learn  that  Messrs.  Blank  &  Co., 
who  have  been  busily  engaged  during  the  war  on  fuzes, 
aeroplanes  and  other  government  work,  are  proposing 
to  place  on  the  market  an  All-British  four-seater 
standard  car. 

"We  understand  that  the  car  will  embody  several 


32  PEACE  AND  BUSINESS 

distinctive  features  and  will  not  be  a  small  car,  the 
wheelbase  being  eleven  feet, 

"It  is  proposed  that  the  selling  price  will  be  in  the 
neighborhood  of  £266 — and  this  will  include  all 
accessories  such  as  self-starter,  electric  hghting,  tires, 
etc.,  etc. 

"A  like  delivery  van  will  also  be  standard  and  sell- 
ing at  a  slightly  cheaper  price." 

There  is  much  food  for  thought  for  the  American 
motor  manufacturer  in  this  advertisement.  First  of 
all  it  shows  the  swift  turn-around  in  British  industry. 
In  the  second  place  it  discloses  the  fact  that  the  British 
having  standardized  shell  making  are  now  turning  to 
the  standardization  of  those  articles  on  which  we  once 
had  a  monopoly  in  large  output.  With  motor  cars  in 
particular  we  shall  face  a  keen  competition  in  Eng- 
land, for  the  reason  that  the  present  tariff  of  thirty- 
three  and  one-third  percent  on  all  imported  cars  will 
undoubtedly  be  maintained  for  a  considerable  time  in 
order  to  give  home  manufacture  a  chance  to  recuper- 
ate. Practically  all  the  automobile  makers  in  England 
concentrated  on  aeroplane  engines  and  big  war  trucks 
during  the  war.  With  the  introduction  of  thousands 
of  American  and  French  cars  they  have  lost  a  great 
deal  of  their  own  goodwill.  They  are  determined  to 
get  this  back.  Meanwhile  we  shall  have  to  open  up 
new  export  markets  for  our  surplus  trucks  and  cars. 

Throughout  England  the  arsenal  has  become  the 
factory  of  peace.  The  greatest  of  all  British  arma- 
ment firms  on  the  Clyde,  which  made  everything  from 
a  machine  gun   to  a   sixteen-inch  naval  monster,   is 


THE  NEW  BRITAIN  33 

making  a  line  of  peace  goods  that  includes  sewing 
machines,  turbines,  gas  engines,  magnetos,  motor  cars 
and  typewriters.  One  of  the  huge  ordnance  plants 
at  Coventry  has  been  converted  into  a  giant  producer 
of  electrical  machinery.  Here  is  where  you  get  tlie 
first  evidence  of  the  new  British  independence  of  Ger- 
man goods.  The  old  Gennan  electric-machinery  trust 
— the  "A.E.G." — is  not  likely  to  get  a  foothold  in  the 
United  Kingdom  again. 

Before  all  this  machinery  could  be  shifted  from  war 
to  peace  one  important  thing  had  to  be  done.  It  was 
the  disposal  of  the  immense  mass  of  war  stores.  This 
was  the  situation :  For  four  years  and  three  months 
every  ounce  of  productive  energy  in  the  United  King- 
dom, with  the  exception  of  Ireland,  was  devoted  to 
war  output  regardless  of  wear  and  tear  and  cost.  The 
task  was  to  beat  the  German.  In  every  theater  of 
war  the  British  piled  up  supplies.  Guns  and  men  had 
to  be  fed;  mechanical  transport  accumulated  at  a  tre- 
mendous rate;  vast  surpluses  were  concentrated  both 
at  home  and  abroad  as  insurance  against  submarine 
depredations.  Everything  was  dumped  into  the  giant 
hopper  of  the  conflict. 

The  decks  had  to  be  cleared  of  this  mass  of  mate- 
rial. You  get  some  idea  of  the  job  when  I  tell  you 
that  the  army  surplus  stores  over  and  above  the  quan- 
tity retained  for  emergency  and  the  future  were  ap- 
praised at  not  less  than  $2,500,000,000.  In  addition 
exactly  470  square  miles  of  land  were  occupied  by 
government  buildings  either  for  storage,  manufacture 
or  otherwise.     Yet  this  only  represented,  so  far  as 


34  PEACE  AND  BUSINESS 

stores  were  concerned,  the  material  hang  over  of  Brit- 
ish war  suppHes.  The  prompt  disposal  of  this  mate- 
rial meant  much  to  the  new  British  industry,  as  you 
will  now  see.  By  absorbing  as  much  of  this  material 
at  home  as  possible  British  factories  were  free  to 
plunge  at  once  into  the  manufacture  of  products  to 
supplant  the  immense  mass  of  wartime  importations, 
and  also  to  renew  and  expand  a  foreign  trade  that 
had  suffered  enormously  during  those  four  years  of 
travail. 

Once  more  the  Ministry  of  Reconstruction  got  busy, 
with  characteristic  energy  and  foresight.  Organized 
and  ready  to  swing  into  action  was  the  Advisory 
Council  on  the  Disposal  of  Surplus  Government  Prop- 
erty, of  which  Lord  Salisbury  is  chairman.  Its  first 
step  was  to  begin  a  complete  survey  of  the  needs  of 
the  various  British  municipalities.  The  idea  behind 
the  survey  was  to  provide  cities  and  rural  communities 
with  machinery  or  supplies.  The  surplus  stores  rep- 
resent everything  from  a  lawn  mower  to  a  five-ton 
motor  truck.  Hence  every  conceivable  demand  could 
be  met.  It  not  only  enabled  Britain  to  get  the  best 
stuff  at  cost  but  it  expedited  the  whole  business  of 
restoration. 

All  municipal  stores  were  low,  due  to  the  war's 
drain  on  commodities.  The  City  of  London,  for  ex- 
ample, needed  a  thousand  trucks ;  Liverpool  wanted  a 
hundred  water  carts;  half  a  dozen  counties  required 
rock  crushers  and  rollers  for  their  highways.  The 
overseas  dominions  were  not  forgotten.  The  ships 
that  are  taking  the  Anzacs  back  home  are  also  carry- 


THE  NEW  BRITAIN  35 

ing  machinery  and  motor  equipment  for  the  expansion 
of  the  Australian  Commonwealth.  Everybody  came 
in  on  this  grand-prize  package  of  billions. 

This  mountain  range  of  material  requires  an  im- 
mense storage.  Likewise  it  must  be  transported  to 
all  parts  of  the  Kingdom.  The  next  step  was  to  sur- 
vey the  ports  in  their  relation  to  the  railways,  so  that 
the  material  will  have  the  shortest  route  to  the  sea- 
board. All  the  storage  has  been  pooled.  The  under- 
lying motive  of  this  phase  of  reconstruction — as  well 
as  all  others — is  "Cut  the  carry."  England  has 
learned  how  to  concentrate  effort.  It  took  her  a  long 
time  to  get  speeded  up  but  she  has  caught  the  pace 
now. 

So  much  for  the  unused  material.  In  addition 
there  are  hundreds  of  thousands  of  tons  of  war  and 
manufacturing  equipment  damaged  through  exposure, 
storage  or  enemy  action.  All  this  has  come  under 
the  ministration  of  the  Salvage  Department  of  the 
army,  which  is  one  of  the  many  permanent  gifts  that 
the  war  has  made  to  humanity.  This  remarkable 
work,  which  began  as  a  sort  of  despised  fifth  wheel 
of  the  army  in  France,  saved  the  War  Office  more 
than  half  a  billion  dollars  in  three  years.  It  has  be- 
come a  permanent  institution  and  will  have  an  im- 
mense effect  on  the  rehabilitation  of  the  whole  Empire. 
Salvage  and  reconstruction  go  hand  in  hand. 

The  necessity  for  disposing  of  surplus  government 
property  has  led  to  the  organization  of  a  whole  new 
government  department  that  points  the  way  for  a 
kindred  step  in  America.     Since  an  immense  number 


36  PEACE  AND  BUSINESS 

of  men  must  be  kept  under  arms  for  a  considerable 
period  and  because  the  government  will  continue  as 
a  purchaser  on  a  large  scale  a  Ministry  of  Supply  has 
been  established  with  Lord  Inverforth  as  first  Min- 
ister. It  will  inevitably  become  the  most  important 
post  in  the  Cabinet,  for  the  reason  that  it  will  grad- 
ually become  the  general  national  provider.  This 
ministry  will  really  supervise  disposal,  because  it  must 
keep  a  close  tab  on  existing  stores.  It  will  be  the 
center  of  all  governmental  procurement,  and  it  will 
standardize  the  supplies  of  peace  precisely  as  it  stan- 
dardized the  munitions  of  war.  During  the  war,  the 
British  Army  contract  became  a  sterilized  document 
It  loses  none  of  its  character  with  peace.  Henceforth 
every  contract  for  national  supplies  must  be  censored 
at  the  Ministry  of  Supply,  which  will  gradually  dis- 
place and  succeed  the  Ministry  of  Munitions. 

The  question  of  national  supply  naturally  leads  to 
the  all-important  matter  of  raw  materials  and  their 
control.  It  is  almost  unnecessary  to  say  that  rigid 
control,  both  of  industry  and  materials,  was  one  of 
the  first  aids  to  victory.  The  waging  of  the  war  on 
such  an  unprecedented  scale  drained  resources  to  the 
limit.  More  ammunition  was  expended  in  a  single 
day  on  the  Somme  than  during  the  whole  Boer  War. 
Now  that  all  facts  are  permissible  I  can  say  that  every 
week  England  sent  sixty  thousand  tons  of  explosives 
to  France  alone.  Without  control  this  would  have 
been  impossible. 

In  no  country  was  it  more  drastic  than  in  England. 
Life  was  one  control  after  another.     Indeed  every- 


THE  NEW  BRITAIN  37 

thing  was  rationed  except  virtue  and  the  weather. 
Those  who  irked  the  most  under  the  drastic  regula- 
tions reaHzed  how  necessary  they  were  to  success  in 
the  struggle  against  Germany. 

The  supreme  court  of  control  during  the  war  was 
the  War  Priorities  Committee,  of  which  Lieut.  Gen. 
J.  C.  Smuts,  the  one-time  Boer  leader,  was  chairman. 
Associated  with  him  were  the  Secretary  of  State  for 
War,  the  First  Lord  of  the  Admiralty,  the  Minister 
of  Munitions,  the  President  of  the  Board  of  Trade, 
the  Minister  of  Reconstruction  and  the  Director  of 
National  Service.  They  saw  that  every  ton  of  mate- 
rial essential  for  war  did  its  duty.  This  control  was 
distributed.  The  Ministry  of  Munitions,  for  instance, 
allocated  all  steel  and  copper.  The  Board  of  Trade 
rationed  coal  and  chemicals;  and  so  on. 

With  the  end  of  the  war  the  first  question  that 
came  from  the  manufacturers  was :  "Will  control  con- 
tinue?" It  was  natural.  There  could  be  no  return 
to  normal  output  without  relaxation  of  restriction,  for 
the  reason  that  though  hundreds  of  factories  owned 
quantities  of  steel,  iron,  copper,  brass  and  nickel,  these 
materials  could  not  be  employed  without  a  priority 
of  work  order. 

The  Ministry  of  Reconstruction,  the  Ministry  of 
Munitions  and  the  Board  of  Trade — the  three  arbiters 
of  the  new  industrial  fate  of  England — did  not  keep 
the  producers  waiting  long.  On  Novemebr  twelfth 
— the  day  after  the  signing  of  the  armistice — the  edict 
went  forth :  "Industry  must  have  the  widest  possible 
freedom."     The  lid  of  control  was  practically  ripped 


'   ;    *  * 


lot)^  5o 


38  PEACE  AND  BUSINESS 

off.  Cooperation  succeeded  restraint  almost  over- 
night. 

In  hundreds  of  factories  the  superintendents  dug 
down  into  dust-covered  and  long-deferred  orders  and 
began  to  allot  them  throughout  the  works.  These  or- 
ders covered  goods  that  ranged  from  bathtubs  to  the 
steel  work  for  office  buildings.  During  the  war  all 
construction  save  for  war  work  was  practically  pro- 
hibited. With  peace  the  country  faced  a  colossal 
amount  of  building.  In  addition  to  the  renewal  of 
old  structures  an  almost  staggering  amount  of  fresh 
erection  had  to  be  made.  This  includes  not  less  than 
500,000  houses  for  workmen,  which  are  part  of  a  vast 
housing  plan  that  is  one  of  the  many  activities  of  the 
Ministry  of  Reconstruction.  If  you  have  any  doubt 
about  an  ample  employment  in  England  during  the 
next  few  years  this  little  matter  of  building  will  help 
to  dispel  it. 

Though  industry  has  been  given  the  greatest  pos- 
sible freedom  there  is  still  a  general  supervision  over 
certain  materials.  The  War  Priorities  Committee  has 
been  succeeded  by  a  Post- War  Priorities  Committee, 
which  is  the  watchdog  of  raw  materials  for  the  period 
of  reconstruction.  General  Smuts  is  the  chairman, 
and  his  associates  include  the  Minister  of  Reconstruc- 
tion, the  President  of  the  Board  of  Trade,  the  Min- 
ister of  Labor,  the  Minister  of  Shipping,  the  new 
Minister  of  Supply  and  the  Minister  of  Munitions. 
One  of  its  principal  functions  is  to  see  that  no  scrap 
of  raw  material  controlled  or  emanating  from  Britain 
gets  into  the  hands  of  the  enemy  powers.     The  Em- 


THE  NEW  BRITAIN  39 

pire  is  determined  that  the  enemy  of  the  battle  field 
must  remain  the  antagonist  of  the  market  place. 

At  the  cost  of  millions  of  men  and  biUions  of  dol- 
lars England  has  learned  the  value  of  raw  materials. 
Germany's  whole  supreme  effort  in  the  field  was  based 
on  an  imperialized  industry  that  had  its  grip  on  metal 
and  other  essentials  throughout  the  world.  Britain  will 
duplicate  that  performance,  but  in  a  constructive  way. 

Britain's  new  policy  was  summed  up  to  me  by  a 
high  government  official  who  said :  "You  do  not  need 
a  diagram  to  point  out  the  fact  that  the  war  ravaged 
the  world's  supply  of  raw  materials.  The  struggle 
to  obtain  them  for  reconstruction  will  be  bitter.  Eng- 
land will  think  of  herself  first.  After  our  own  needs 
will  come  the  replenishment  of  the  trade  areas  devas- 
tated by  the  Hun.  We  do  not  propose  to  give  Ger- 
many or  her  old  allies  the  raw  materials  with  which 
to  get  off  first  in  the  race  for  the  after-the-war  trade. 
She  deliberately  destroyed  part  of  the  industrial  re- 
sources of  Belgium  and  northern  France  with  the  sole 
idea  of  crippling  competition  at  the  end  of  the  war." 

Significant  of  the  reborn  British  industry  is  the 
formation  of  a  standing  council  of  seasoned  business 
men  headed  by  Sir  Henry  Birchenough,  who  acts  as 
adviser  to  the  Post-War  Priorities  Committee.  It  is 
a  Who's  Who  of  British  trade,  manufacture  and  ship- 
ping, and  it  is  the  determining  factor  in  the  remaining 
control  of  raw  materials.  This  control,  so  far  as 
Britain  is  concerned,  is  very  amiable  as  compared  with 
the  rigid  exactions  of  wartimes.  It  takes  the  form  of 
a  block  allocation  and  the  specific  rationing  is  done  by 


40  PEACE  AND  BUSINESS 

the  industry  itself.  It  sets  up  an  autonomy,  and  it 
proved  highly  successful  with  civil  industries  during 
the  war. 

One  impressive  indication  that  England  will  never 
be  caught  napping  again  in  the  matter  of  raw  mate- 
rials is  found  in  the  survey  of  materials  which  has 
been  undertaken  by  the  Ministry  of  Reconstruction, 
Its  purpose,  to  quote  the  official  statement,  "is  to  con- 
sider the  nature  and  amount  of  the  supplies  of  mate- 
rial arid  foodstuffs  which  will  be  required  by  the 
United  Kingdom  during  the  period  of  reconstruction 
and  the  return  to  normal  conditions  of  trade  and  the 
steps  which  should  be  taken  to  procure  these  supplies, 
having  regard  to  the  probable  requirements  of  bel- 
ligerent and  neutral  states."  In  the  American  ver- 
nacular John  Bull  is  determined  to  find  out  just  where 
he  stands.  This  combing  out  of  materials  will  un- 
doubtedly prevent  any  future  hoarding  of  essentials, 
which  was  one  of  Germany's  favorite  diversions  in  the 
past. 

If  England  has  learned  one  thing  above  all  others 
it  is  the  value  of  self-sufficiency.  It  was  first  ham- 
mered home  by  the  dependence  upon  Germany  in  the 
key  industries;  the  enormous  consumption  of  raw 
materials  during  the  war  clinched  it.  A  new  imperial- 
ism has  developed  which  finds  expression  in  the  slogan 
"The  Empire's  resources  for  the  Empire."  One  of 
the  dynamos  behind  this  movement  is  the  British  Em- 
pire Producers  Association,  which  awakened  the  na- 
tion to  its  long  and  costly  neglect  in  developing  its 
resources. 


THE  NEW  BRITAIN  41 

Before  the  war  the  United  Kingdom  depended  upon 
Germany  and  Austria  for  eighty  per  cent  of  its  sugar, 
despite  the  fact  that  with  the  exception  of  Cuba, 
Hawaii  and  the  United  States,  most  of  the  sugar-cane 
areas  of  the  world  are  within  the  imperial  confines. 
During  the  last  two  years  immense  areas  of  beet  sugar 
have  been  planted  in  the  various  British  Colonies,  not- 
ably Australia.  There  will  be  no  dependence  hence- 
forth upon  Germany  or  Austria  for  sugar.  Cotton 
affords  another  example.  Thanks  to  the  British  Cot- 
ton Growing  Association  huge  plantations  have  been 
established  in  India  and  Africa.  The  Empire  has 
tapped  fresh  oil  reservoirs  in  Burma  and  increased 
her  coffee  and  tea  growing  in  Ceylon. 

One  of  the  results  of  the  war  is  the  organization 
of  the  Imperial  Mineral  Resources  Bureau,  which  has 
undertaken  an  intensive  development  of  the  resources 
of  the  United  Kingdom  with  special  reference  to  the 
nonferrous  metals.  Its  efforts  have  also  uncovered 
new  coal  areas  and  iron-ore  deposits,  and  really  given 
the  Kingdom  many  fresh  natural  assets.  The  tin- 
mining  industry  of  Cornwall,  which  went  into  a  de- 
cline before  the  war,  has  had  a  rebirth  of  productivity. 
A  mines  department  is  one  of  the  many  new  Govern- 
ment institutions. 

Still  more  striking  is  the  formation  of  the  British 
Metal  Corporation,  charged  with  the  exploitation  of 
the  whole  British  trade  in  metals.  It  faces  recon- 
struction as  the  one  rival  of  the  famous  German 
Metallgesellschaft,  which  was  the  Teutonic  metal  trust 


42  PEACE  AND  BUSINESS 

and  which  had  its  tentacles  in  AustraHa,  Canada,  Asia, 
Africa  and  America.  Wherever  metals  were  mined 
or  refined  there  you  found  the  agent  of  this  Colossus, 
ready  and  willing  to  corner  output  and  make  any  in- 
ducement to  get  a  monopoly  on  future  business.  The 
British  Metal  Corporation  has  taken  a  sheet  from  the 
book  of  this  German  outfit.  Every  dollar  of  its  cap- 
italization of  $25,000,000  has  been  subscribed  and 
paid  up.  Like  British  Dyes,  Limited,  it  is  sponsored 
by  the  Board  of  Trade  and  therefore  will  expand  with 
peace.  With  the  government  standing  squarely  be- 
hind it  it  has  every  benefit  of  the  British  world-wide 
trade  intelligence  system  and  shares  in  the  imperial 
preference  which  will  be  one  of  the  trade  safeguards 
of  the  Empire  in  the  coming  days.  This  powerful 
new  agency  for  British  industrial  development  spe- 
cializes in  copper,  tin,  lead  and  nickel.  It  is  setting 
up  smelting  and  refining  works.  The  next  logical 
step  will  be  the  acquisition  of  mines.  Nothing  will 
be  left  to  chance.  The  leading  figure  in  the  enter- 
prise is  Sir  Charles  Fielding,  head  of  the  famous  Rio 
Tinto  copper  mines  in  Spain,  which  are  British-owned. 
With  iron  and  steel  England  has  been  equally  vigi- 
lant. Since  1914  she  has  increased  her  annual  out- 
put of  steel  from  7,000,000  tons  to  12,000,000  tons. 
By  the  end  of  this  year  this  will  probably  be  increased 
by  2,000,000  tons  more.  Germany's  rise  to  power  in 
iron  and  steel  was  over  the  body  of  a  prostrate  indus- 
trial Britain.  The  dead  has  come  to  life.  In  this 
resurrection  lies  one  huge  obstacle  to  the  swift  eco- 
nomic come-back  of  the  Teuton. 


THE  NEW  BRITAIN  43 


II 


Raw  materials,  however  abundant,  provide  only  one 
step  toward  the  new  industrial  freedom.  The  real 
essential  is  an  alert  and  highly  organized  production 
and  this  essential  has  been  found.  The  war  brushed 
the  cobwebs  out  of  British  factories  and  awoke 
them  to  their  responsibility  and  capacity.  Peace 
therefore  found  industry  like  an  athlete  trained  to 
the  minute.  The  keynote  of  the  industrial  peace 
offensive  is  summed  up  in  three  words :  "A  great  out- 
put." With  it  England  will  set  up  the  economic  secu- 
rity that  will  be  her  weapon  against  any  possible 
future  Germanic  commercial  aggression.  On  it  are 
based  her  world-trade  hopes. 

Her  capacity  for  enlarged  production  was  amply 
demonstrated  during  the  four  years  of  stress  and 
storm.  Not  long  ago  I  heard  of  a  certain  factory  in 
Birmingham  that  had  reluctantly  made  a  contract  to 
deliver  10,000  finished  parts  of  a  certain  appliance 
each  week.  This  agreement  was  entered  into  in  Janu- 
ary, 191 5.  Before  the  end  of  hostilities  it  was  turn- 
ing out  250,000  parts  a  week  practically  in  the  same 
shop.  Science  combined  with  standardization  had 
done  the  job.  The  card  index  and  the  efficiency  ex- 
pert are  as  common  to-day  in  English  factories  as 
in  American. 

The  British  producer  has  really  and  truly  learned 
the  value  of  cooperation.     This  finds  its  best  expres- 


44  PEACE  AND  BUSINESS 

sion  perhaps  in  the  work  of  the  Federation  of  British 
Industries.  In  1917,  it  had  a  membership  of  five 
hundred  and  sixty-three  firms  and  seventy-eight  trade 
associations.  On  the  first  of  January,  1918  it  had 
16,000  firms  on  its  rolls,  whose  combined  capitaliza- 
tion aggregated  $20,000,000,000.  It  represents  what 
a  merger  of  the  Chamber  of  Commerce  of  the  United 
States  and  the  National  Association  of  Manufacturers 
would  express,  and  then  some. 

The  federation  is  the  new  sponsor  of  British  world 
trade  and  stands  squarely  behind  the  whole  recon- 
struction program.  It  did  not  wait  until  the  armistice 
released  industry.  In  every  important  world  capital 
outside  the  enemy  countries  it  had  a  staff  of  legal  ad- 
visers at  the  service  of  British  merchants  and  manu- 
facturers everywhere.  These  advisers  were  also  trade 
scouts  who  ferreted  out  business  opportunities  and 
sent  comprehensive  reports  about  them  back  to  Lon- 
don, where  they  got  swift  action. 

More  important  than  this,  however,  was  the  offen- 
sive and  defensive  trade  alliance  entered  into  with  half 
a  dozen  countries.  In  France,  for  example,  the  fed- 
eration has  formed  the  Association  of  Great  Britain 
and  France,  whose  sole  function  is  to  stimulate  com- 
merce between  the  two  countries.  In  Serbia  it  has 
organized  the  Association  of  Great  Britain  and  Ser- 
bia. Other  similar  bodies,  due  to  the  same  initiative 
and  enterprise,  are  the  Anglo-Brazil  Trade  Associa- 
tion and  the  Anglo-Greece  Trade  Association;  and 
others  identical  in  scope  are  in  process  of  organization 
in  Argentina,  Holland  and  Chile.     Each  of  these  as- 


THE  NEW  BRITAIN  45 

sociatlons  has  one  or  more  well-equipped  offices,  which 
become  at  once  rallying  points  for  British  trade  and 
the  center  of  an  invaluable  commercial  intelligence. 
Foreign  trade  can  be  built  only  out  of  knowledge  of 
needs.  This  is  the  supreme  lesson  that  America  must 
learn  before  she  strikes  her  permanent  international 
business  gait. 

Backing  up  the  world-trade  aspirations  of  the  Fed- 
eration of  British  Industries  is  a  scheme  of  collective 
advertising.  If  a  single  British  manufacturer  or  if 
even  half  a  dozen  wanted  to  put  their  names  and  trade- 
marks in  the  leading  journals  of  foreign  countries  it 
would  be  a  very  expensive  proposition.  But  if  a 
hundred  of  them  combine  for  this  purpose  it  is  not 
such  a  drain  on  the  office  purse.  This  is  precisely 
what  the  Federation  has  done.  Each  group  of  indus- 
tries represented  has  taken  space  in  the  leading  popu- 
lar and  trade  publications  of  France,  Spain,  Holland, 
Switzerland  and  several  of  the  South  American  coun- 
tries for  an  intensive  publicity  campaign  which  has 
one  idea  in  mind.  That  idea  is  to  proclaim  the  worth 
and  might  of  the  British-made  product.  The  British 
manufacturer  is  big  enough  to  see  that  whatever  ad- 
vertises his  country  boosts  the  goods  of  the  country 
at  the  same  time. 

Collective  bargaining  has  its  full  mate  in  this  col- 
lective exploitation.  It  indicates  that  the  value  of  ad- 
vertising has  soaked  thoroughly  into  the  British  con- 
sciousness. Before  the  war  the  number  of  national 
advertisers  was  comparatively  small.  The  billboard, 
the  poster,  and  the  display  advertisement  in  the  news- 


46  PEACE  AND  BUSINESS 

paper  and  the  magazine  not  only  recruited  Kitchener's 
army,  sold  war  bonds,  brought  home  the  great  lesson 
of  economy  in  food;  but  they  also  showed  that 
printer's  ink,  liberally  and  wisely  used,  is  a  great  fac- 
tor in  the  development  of  a  nation. 

The  work  of  the  federation  at  home  is  no  less  effec- 
tive than  its  operations  abroad.  It  has  reorganized 
British  industry  into  seventeen  main  groups,  each  of 
which  includes  a  major  industry  or  a  closely  allied 
group  of  smaller  industries.  This  makes  for  rapid 
development,  swift  mobilization  and  distribution  of 
raw  materials;  and  united  and  therefore  cheaper  pub- 
licity. In  addition  to  these  groupings  the  members 
have  been  organized  on  a  geographical  basis.  There 
are  sixteen  districts  in  England,  Scotland  and  Wales, 
each  with  its  own  organizing  secretary.  The  manu- 
facturers in  these  various  districts  get  together  once 
or  twice  a  month,  talk  over  the  situation,  and  keep  in 
touch  with  what  they  and  the  rest  of  the  world  are 
doing. 

At  the  head  of  the  Federation  of  British  Industries 
is  Sir  Vincent  Caillard,  head  of  the  great  armament 
house  of  Vickers,  Ltd.  It  is  more  than  a  coincidence 
that  this  great  captain  of  British  industry — his  estab- 
lishment is  the  Krupps  of  England — should  be  at 
the  helm  when  British  industry  is  being  transformed 
from  a  war  to  a  peace  basis.  Sir  Vincent  is  one  of 
the  most  progressive  men  in  Britain ;  an  enthusiast  on 
labor-saving  devices,  who  worships  the  god  of  quan- 
tity output.  His  influence  is  bound  to  be  felt  through- 
out all  British  production.     It  is  typical  of  the  new 


THE  NEW  BRITAIN  47 

order  of  industrial  things  in  Britain  that  the  secretary 
of  the  federation  is  C.  Tennyson,  a  grandson  of  the 
poet,  who  prefers  the  job  of  piloting  business  to  a 
career  of  literature. 

A  still  further  evidence  of  the  fact  that  British  in- 
dustry has  got  together  for  a  world  effort  is  shown  in 
the  organization  of  a  Joint  Council  of  Manufacturers, 
consisting  of  the  Federation  of  British  Industries,  the, 
British  Empire  Producers  Association  and  the  Im- 
perial Council  of  Commerce.  The  objects  of  this  or- 
ganization are : 

"To  consider  and  report  on  any  questions  of  mutual 
interest  reflecting  the  common  aims  of  the  three 
bodies — namely,  the  conservation  and  development  of 
the  industry,  production  and  commerce  of  the  United 
Kingdom  and  her  oversea  Dominions. 

"To  initiate  the  consideration  of  any  such  subject. 

"To  take  any  action  in  relation  to  such  subjects  that 
may  be  specifically  authorized  by  the  constituent 
bodies." 

No  other  phase  of  the  war-born  British  industrial 
expansion  is  quite  so  significant  as  the  advance  made 
in  the  key  industries.  Here  you  touch  a  development 
of  peculiar  interest  to  us.  When  the  great  war 
crashed  into  civihzation  in  1914  it  revealed  many 
things.  It  showed  the  brutality  that  lay  behind  the 
smug  German  smile;  it  disclosed  the  lust  beneath  the 
veneer  of  Teutonic  kultur.  No  less  striking  was  the 
disclosure  of  the  dependence  of  Britain  and  America 
upon  Germany  for  the  essentials  to  manufacture.  As 
most  people  know,  perhaps  the  most  important  of 


48  PEACE  AND  BUSINESS 

these  were  the  coal-tar  dyes,  which  were  as  necessary 
to  the  making  of  munitions  as  they  were  to  peace- 
ful trade.  Though  England's  imports  of  dyestuffs 
amounted  to  only  $10,000,000  a  year  they  made  a 
textile  industry  aggregating  $1,000,000,000  a  year 
possible. 

In  the  struggle  to  achieve  independence  of  these 
German  dyes  in  the  future  England  has  made  amazing 
progress.  This  brings  me  to  an  episode  that  empha- 
sizes the  new  get-there  spirit  of  British  business.  It 
likewise  shows  that  Uncle  Sam  was  not  on  the  job  at 
a  certain  great  hour  when  he  might  have  fastened  his 
hooks  into  an  asset  of  tremendous  value  to  his  indus- 
try. Before  the  war  the  two  important  dye-production 
centers  were  a  group  of  towns  in  Germany  and  the 
busy  little  city  of  Bales,  in  Switzerland,  which  is  on  the 
Rhine  and  almost  within  a  stone's  throw  of  the  late 
Kaiser's  dominions.  These  Swiss  factories  were  in 
the  main  Swiss-owned,  though  they  had  many  German 
operatives ;  and  what  was  more  important  they  owned 
or  controlled  the  German  dye  formulas.  For  years 
the  great  bulk  of  the  raw  materials  with  which  they 
worked  came  from  Germany.  With  the  outbreak  of 
hostilities  Germany  shut  off  this  supply  and  the  Basel 
dye  works  had  to  look  elsewhere.  The  enterprising 
American  consul  there  immediately  got  busy,  sent  a 
report  of  the  situation  to  Washington,  and  expected 
that  his  Government  would  take  immediate  action  to 
annex  this  invaluable  industrial  domain.  Less  than  a 
month  later,  however,  a  representative  of  the  British 
Board  of  Trade  appeared  on  the  scene,  sewed  up  most 


THE  NEW  BRITAIN  49 

of  the  Basel  dye  manufactures  with  ironclad  contracts 
and  agreed  to  furnish  the  raw  materials.  To-day 
England  in  addition  to  her  own  government-endowed 
dye  industry  has  the  benefit  of  the  great  majority  of 
the  Swiss  works  with  all  their  trained  workers  and 
their  formulas,  which  were  worth  any  price  that  was 
paid  in  the  transaction.  Just  how  Washington  fell 
down  in  this  matter  is  another  story. 

What  England  has  done  with  dyes  she  has  dupli- 
cated in  practically  every  one  of  the  kindred  essential 
industries.  The  curtain  was  raised  on  her  perform- 
ance at  the  New  British  and  Key  Industries  Exhibi- 
tion which  was  held  at  Central  Hall  in  October,  19 18. 
It  was  a  remarkable  demonstration  of  the  independence 
which  is  the  keynote  of  the  whole  British  industrial 
endeavor.  In  191 3  this  exhibition  could  not  have 
been  held  anywhere  in  the  world  except  in  Germany. 
In  coal-tar  dyes,  for  example,  twelve  firms  exhibited. 
They  were  headed  by  British  Dyes,  Ltd.,  organized  and 
endowed  by  the  Board  of  Trade  and  representing  the 
new  partnership  between  the  government  and  big  busi- 
ness. This  company  is  not  only  a  going  and  prosper- 
ous concern  but  is  reaching  out  throughout  the  world. 

With  magnetos  a  similar  achievement  has  been  reg- 
istered. Before  the  war  practically  every  magneto 
used  in  a  British  motor  car  or  an  aeroplane  came  from 
a  famous  firm  in  Stuttgart.  The  country  is  now 
practically  self-contained  in  the  production  of  this  all- 
important  apparatus.  When  the  war  ended  more  than 
eighty  per  cent  of  the  magnetos  used  by  the  Royal  Air 
Force — easily  the  largest  consumer  in  the  country — 


50  PEACE  AND  BUSINESS 

were  of  purely  British  design  and  manufacture.  Brit- 
ish magnetos  have  been  used  on  aeroplanes,  seaplanes, 
airships,  tanks,  trucks,  motor  cycles,  ambulances,  cars, 
searchlights,  motor  boats,  pumps,  wireless  sets,  blower 
engines,  exhaust  fans,  salvage  sets,  agricultural  trac- 
tors, caterpillar  tractors,  motor  machine-gun  carriers, 
trench  diggers,  auxiliary  engines  on  submarines,  re- 
mount hoists,  miners'  safety  lamps,  hand-starting 
traveling  workshops,  motor  plows,  dynamo  lighting 
sets,  X-ray  sets  and  gas  engines.  Not  only  have  Brit- 
ish magnetos  come  to  stay  but  an  organization  known 
as  the  British  Ignition  Apparatus  Association,  with 
more  than  a  dozen  powerful  firms  as  members,  has 
been  formed  to  keep  the  new  industry  up  to  a  proper 
production. 

So  too  with  tungsten — the  key  of  keys.  Germany 
refined  seventy  per  cent  of  the  world's  supply  before 
the  war,  despite  the  facts  that  forty  per  cent  of  it  was 
mind  within  the  British  Empire  and  fifty  per  cent  of 
the  refined  output  was  used  by  British  manufacturers. 
All  that  is  changed  now.  At  the  Key  Industries  Ex- 
hibition eleven  all-British  firms  showed  that  hence- 
forth not  a  pound  of  German-produced  or  German- 
refined  tungsten  is  necessary  for  manufacturing  pur- 
poses throughout  the  United  Kingdom.  A  similar 
advance  was  shown  with  spelter,  nickel,  zinc,  man- 
ganese, lead,  antimony  and  graphite.  What  is  true  of 
these  vital  industries  is  also  true  of  optical,  chemical 
and  bacteriological  glass,  in  which  Germany  and  Aus- 
tria had  almost  a  monopoly  before  the  Prussian  mad- 
ness was  let  loose  on  the  universe.    All  this  glass  in 


THE  NEW  BRITAIN  51 

ample  quantity  and  satisfactory  quality  is  made  in 
England,  as  more  than  a  dozen  exhibits  showed. 

The  important  matter  of  interest  to  America  in  con- 
nection with  these  key  industries  is  that  every  one  of 
them  will  be  protected  by  an  adequate  tariff  for  many 
years  to  come.  I  close  this  section  with  a  remark 
made  to  me  by  a  member  of  the  cabinet,  which  has 
tremendous  meaning  for  the  whole  world  of  industry. 
When  I  asked  him  about  the  future  of  dye  manufac- 
ture in  England  he  said :  "Not  until  1929  will  any  dye 
be  permitted  to  come  to  England  from  anywhere  with- 
out a  special  license."  This  protection  will  almost 
inevitably  be  followed  by  a  prohibition  of  absolutely 
every  commodity  that  can  be  produced  within  the 
Empire.  The  American  exporter  will  soon  find  out 
that  "Britain  for  the  British"  is  more  than  a  phrase. 

Closely  related  to  the  growth  of  British  industry  is 
the  new  development  of  hydroelectric  power.  Eng- 
land, like  the  rest  of  the  world,  will  henceforth  try  to 
do  her  work  electrically.  Here  you  have  another  one 
of  the  many  dividends  of  war.  During  those  years 
when  the  Hun  was  running  amuck  coal  came  into  a 
whole  new  prestige.  It  almost  made  and  unmade 
governments.  Germany  used  coal  as  a  merciless 
weapon  against  the  small  neutrals.  She  capitalized 
their  dependence  upon  her  for  this  pivotal  product  and 
with  it  wrung  mighty  exactions.  Together  with  her 
vast  shipping,  coal  formed  one  of  the  principal  Brit- 
ish war  assets. 

The  enormous  demand  for  coal  as  disclosed  by  the 
war  has  led  to  a  national  movement  for  its  conserva- 


52  PEACE  AND  BUSINESS 

tion  in  England.  Coal  is  rationed  and  will  continue 
to  be  rationed  for  an  indefinite  period.  One  reason 
lies  in  the  immense  waste  attached  to  mining  and  dis- 
tribution. The  wastage  in  by-product  of  coal  alone 
is  almost  greater  in  annual  value  than  the  entire 
world's  output  of  gold.  There  is  another  reason  for 
Britain's  conservation  of  fuel.  An  ample  surplus  dur- 
ing the  period  of  reconstruction  will  be  an  invaluable 
bargaining  asset.  The  nation  with  coal  to  spare  dur- 
ing the  next  two  years  will  have  an  advantage  greater 
than  any  that  could  be  contained  in  a  favored-nation 
commercial  treaty.  If  America  is  wise  she  will  use 
coal  as  the  basis  upon  which  to  rear  a  whole  new 
world-wide  trade  relation.  It  is  a  trump  card.  We 
have  the  coal,  and  now,  thanks  to  the  war,  we  have 
ample  cargo  carriers.  It  is  up  to  Washington  to  do 
the  rest. 

Realizing  the  tremendous  bargaining  value  of  coal 
England  is  launching  a  vast  scheme  of  power  pro- 
duction. The  country  is  being  charted  into  regions. 
Each  region  will  have  a  central  power  plant.  The 
juice  will  be  available  to  every  man.  All  that  he  will 
have  to  do  is  to  tap  the  power  main.  The  government 
will  fix  the  price.  It  is  estimated  that  by  the  pro- 
cedure more  than  50,000,000  tons  of  coal  will  be  saved 
each  year.  In  addition  it  will  enable  the  small  manu- 
facturer to  set  up  shop  without  the  considerable  over- 
head cost  of  installing  a  power  plant.  Likewise  it 
will  tend  to  revolutionize  certain  industries,  notably 
spinning. 

By  this    time  you  undoubtedly  have  the  impression 


THE  NEW  BRITAIN  53 

that  the  government  is  standing  squarely  behind  the 
whole  British  commercial  development.  The  main- 
spring of  this  sponsorship  is  the  Board  of  Trade.  For 
years  it  drowsed  in  a  jungle  of  red  tape  awaiting  the 
galvanic  hand  that  would  stir  it  into  life  and  action. 
It  was  a  traditional  top-heavy  British  institution  long 
on  precedent  and  short  on  result.  When  Britain,  like 
America,  suddenly  discovered  with  the  advent  of  war 
that  her  big  business  men  were  a  distinct  national 
asset  Lloyd  George  put  Sir  Albert  Stanley  at  the  head 
of  the  Board  of  Trade.  He  proved  to  be  the  fairy 
prince,  for  he  gave  it  a  sort  of  magic  awakening,  made 
it  a  vitalized  ministry  of  commerce,  a  glorified  school 
of  salesmanship;  the  creator  of  a  definite  and  coordi- 
nated national  trade  policy. 

I  asked  Sir  Albert,  who  by  the  way  got  his  whole 
business  training  in  the  United  States,  what  was  the 
biggest  problem  that  confronted  the  Board  of  Trade. 
He  replied:  "On  the  day  the  armistice  was  signed 
ninety-one  per  cent  of  British  imports  was  for  some 
kind  of  war  munitions.  The  remaining  nine  per  cent 
was  for  civil  needs.  The  nation's  business  job  hence- 
forth is  to  reverse  these  figures." 

This  means  that  every  energy  and  resource  in  the 
Kingdom  will  be  dedicated  to  the  establishment  of  a 
vast  export  trade.  During  the  war  England  learned 
to  do  without  many  imports.  Scores  of  these  came 
under  the  head  of  what  was  then  believed  to  be  neces- 
sities. The  sacrifice  and  abnegation  of  war  have  put 
these  articles — many  of  them  came  from  the  United 
States — into  the  luxury  class.     The  new  world-trade 


54  PEACE  AND  BUSINESS 

creed  of  Britain  gives  scant  aid  or  comfort  to  the 
German  manufacturer  who  may  labor  under  the  delu- 
sion that  his  atrocities  on  land  and  his  crimes  on  sea 
will  be  forgotten.  First  and  foremost  among  the 
conditions  imposed  upon  goods  shipped  into  England 
is  that  every  article  of  foreign  origin,  no  matter  where 
it  is  made,  must  be  plainly  labeled  "Not  British." 
This  means  that  never  again  can  German  goods  mas- 
querade under  British  labels  as  they  did  before  the 
war.  If  the  same  rule,  together  with  an  attested  cer- 
tificate of  origin,  were  enforced  in  the  United  States 
the  immense  factories  that  Germany  has  acquired  in 
neutral  countries  like  Switzerland,  Spain  and  Sweden 
would  soon  go  out  of  commission. 

It  took  England  a  long  time  to  get  wise  to  the  Ger- 
man trade  game.  It  will  take  her  just  as  long  to  have 
a  change  of  heart,  for  she  is  determined  that  the  boche 
will  never  taint  her  trade  again.  The  other  day  I  saw 
the  following  sign  in  a  shop  window  in  Bond  Street, 
which  is  the  fashionable  retail  business  thoroughfare 
in  London: 

"No  person  of  German  birth  whether  naturalized  or 
not  can  enter  these  premises." 

The  new  restrictions  governing  the  electrical  trades 
will  indicate  England's  attitude  about  enemy  manu- 
facture.    They  are : 

"The  prohibition  of  import  of  enemy  goods  for  three 
years  after  the  conclusion  of  peace,  subject  to  importa- 
tion under  license  in  special  circumstances  after  the 
first  twelve  months. 


THE  NEW  BRITAIN  55 

"The  imposition  of  import  duties  sufficiently  high 
to  protect  effectively  the  electrical  industry. 

"The  prevention  of  the  sale  of  any  imported  elec- 
trical goods  at  prices  lower  than  those  current  in  the 
country  of  origin, 

"The  treatment  as  enemy  products  of  all  goods  pro- 
duced in  foreign  countries  by  concerns  controlled  by 
enemy  capital  or  under  enemy  direction," 

These  restrictions  show  clearly  that  the  German  will 
never  again  be  permitted  to  indulge  in  his  favorite 
oversea  sport  of  "dumping."  There  will  be  such  a 
rigid  censorship  and  comparison  of  world  prices  that 
if  in  his  overwhelming  desire  to  come  back  commer- 
cially he  seeks  to  achieve  an  immense  turnover  with  a 
small  margin  of  profit  he  will  have  to  operate  in  some 
domain  that  does  not  fly  the  British  flag  and  in  which 
there  are  no  laws  against  "dumping," 

No  less  exacting  are  the  new  rules  that  govern 
British  shipping.  For  the  next  three  years  no  con- 
ference arrangements  will  be  permitted  between  Brit- 
ish shipowners  and  the  Central  Powers,  especially 
Germany.  The  whole  tendency  of  the  new  British 
trade  policy,  which  is  as  national  in  scope  as  the  closest 
government  cooperation  can  make  it,  is  to  make  Eng- 
land the  new  center  of  universal  trade.  Her  great 
desire  is  to  sell  the  world,  but,  as  both  nations  and 
peoples  have  discovered,  you  cannot  sell  without  buy- 
ing. The  drastic  restrictions  that  she  is  putting  upon 
imports  into  the  Kingdom  will  have  to  be  modified  if 
she  proposes  to  do  business  on  the  scale  that  is  at 
present  outlined. 


56  PEACE  AND  BUSINESS 

The  more  you  go  into  a  study  of  the  new  British 
industrial  policy  the  more  you  realize  that  every  ad- 
vantage is  being  taken  of  the  lessons  of  the  war.  The 
Board  of  Trade,  for  example,  has  established  a  de- 
partment of  scientific  and  industrial  research.  Here 
you  have  a  frank  duplication  of  one  of  the  activities 
that  made  Germany  industrially  great.  Before  the 
war  if  you  wanted  to  find  the  real  source  of  Teutonic 
world-trade  might  you  had  only  to  look  into  the  lab- 
oratories of  Elberfeld,  Stuttgart,  Jena  or  Essen. 
Every  huge  German  manufacturing  establishment  had 
its  corps  of  trained  scientists  and  investigators.  In 
one  famous  drug  establishment  at  Elberfeld,  for  ex- 
ample, there  were  seventy  free-lance  chemists.  Their 
job  was  to  conduct  original  experiments  on  their  own. 
Sometimes  less  than  half  a  dozen  produced  results 
capable  of  commercial  exportation  during  the  year, 
but  these  results  were  worth  millions. 

England  is  developing  her  industry  along  these 
same  scientific  lines.  For  one  thing  she  has  founded 
an  institute  of  industrial  chemistry.  The  University 
of  London  has  shattered  its  tradition  about  not  having 
any  vulgar  contact  with  "persons  in  trade"  and  now 
confers  degrees  in  Commerce.  British  business  is 
having  all  the  scientific  research  that  the  trafiic  will 
bear.  Likewise  a  whole  new  system  of  apprenticeships 
in  the  factories  has  been  inaugurated.  German  effi- 
ciency will  be  fought  Xvith  effectiveness. 

That  England  is  capitalizing  every  up-to-date  trade 
trick  is  disclosed  by  what  may  be  called  the  World 
Trade  Circus  fostered  by  the  Board  of  Trade.    It  is  a 


THE  NEW  BRITAIN  57 

portable  exhibition  of  British  wares  that  will  make  a 
tour  on  wheels  or  on  shipboard  through  all  the  leading 
countries,  including  Japan  and  China.  Each  firm's 
exhibit  will  be  arranged  so  that  it  can  be  placed  without 
extra  packing  in  standard  cases  which  may  be  set  up 
in  a  public  hall  or  even  shown  on  a  railway  train.  It 
is  estimated  that  the  London,  Manchester  or  Birming- 
ham manufacturer  will  be  able  to  display  his  wares 
all  round  the  globe  for  less  than  one  thousand  dollars. 
That  this  typically  and  almost  aggressively  American 
idea  of  goods  exploitation  has  emanated  from  such  a 
one-time  sedate  and  dignified  institution  as  the  Board 
of  Trade  is  one  of  the  post-war  miracles. 

Experience  has  shown  that  accurate  and  up-to-date 
commercial  intelligence  is  a  first  aid  to  business.  In 
this  respect  England  has  a  priceless  asset  in  the  shape 
of  a  Who's  Who  in  Foreign  Trade  compiled  out  of  the 
information  yielded  by  the  censorship  and  the  War 
Trade  Intelligence  Department.  For  more  than  four 
years  practically  all  the  mail  from  enemy  and  neutral 
countries  as  well  as  the  mail  from  the  United  States 
to  England  passed  through  British  hands.  These  let- 
ters and  documents  contained  the  trade  secrets  of  the 
world.  They  not  only  disclosed  plans  and  projects  but 
also  quoted  prices  and  contained  other  data  of  inestima- 
ble value.  England  therefore  begins  her  era  of  re- 
organization with  a  complete  knowledge  of  what  her 
principal  competitors  propose  to  do. 

That  England  is  ready  to  cope  with  whatever  eco- 
nomic emergency  may  arise  is  evident  by  the  formation 
of  a  huge  money  trust  that  makes  its  prototype  in  the 


58  PEACE  AND  BUSINESS 

United  States  seem  like  a  mere  pretender.  Our  octo- 
pus was  for  home  operation.  The  British  giant  re- 
gards the  world  as  its  field.  It  is  the  power  plant  of 
the  reconstructed  and  expanded  British  business. 

When  the  war  began  there  were  eleven  great  joint- 
stock  banks  in  London.  To  hint  at  any  step  that  would 
disturb  the  inviolate  individuality  of  any  one  of  these 
institutions  meant  heresy.  To-day — and  it  has  all 
happened  within  the  past  twelve  months — they  have 
been  converted  into  five  combinations  that  represent 
the  absorption  of  sixteen  different  banks,  whose  de- 
posits aggregate  nearly  $7,000,000,000. 

The  new  Lloyd's  combine  is  typical  of  what  has  been 
going  on.  It  includes  the  famous  Lloyd's  Bank,  with 
deposits  $880,000,000;  the  Capital  and  Counties,  with 
$300,000,000  on  its  books ;  the  National  of  Scotland, 
with  $150,000,000;  and  the  London  and  River  Plate, 
with  $125,000,000.  The  consolidated  concern  has  ex- 
actly 1,525  different  branches.  Dominating  this  Gib- 
raltar of  finance  is  Henry  Bell,  of  Lloyd's,  who  is 
rapidly  succeeding  to  the  authority  maintained  for 
years  by  Sir  Edward  Holden,  chai/man  of  the  London 
City  and  Midland,  who  was  the  dean  of  London  bank- 
ing. Even  Sir  Edward's  bank,  which  once  expressed 
the  last  word  in  conserv^ative  British  banking,  has  suc- 
cumbed to  the  syndicate  fever,  which  shows  that  a 
real  revolution  in  method  and  organization  has  been 
effected. 

What  does  this  massing  of  millions  mean?  Many 
things,  and  all  of  them  of  vital  importance  to  the 
United  States.    In  the  first  place  it  is  England's  procla- 


THE  NEW  BRITAIN  59 

mation  to  the  rest  of  the  world  that  London  will  re- 
main the  international  financial  center.  With  such  a 
wealth  of  concentrated  capital,  whose  outposts  are 
planted  wherever  the  trade  winds  blow,  the  universal 
symbol  of  trade  will  be  the  pound  sterling.  It  further 
indicates  that  there  is  ample  capital  behind  the  new 
British  industry.  With  only  a  few  men  at  the  top  to 
decide  on  big  propositions  there  will  be  no  delay  in 
underwriting  fresh  enterprise  and  expanding  the  old. 
Since  the  close  of  hostilities  there  has  been  a  tremen- 
dous demand  for  money.  It  grows  out  of  the  need 
of  funds  to  renew  the  wear  and  tear  of  war  on  ma- 
chinery and  plant,  and  the  increased  cost  of  production. 

There  is  still  another  highly  useful  purpose  behind 
this  federation  of  finance,  for  such  it  is.  It  will  be  the 
one  group  in  the  Allied  countries  capable  of  bucking 
the  inevitable  union  of  German  banks  which  will  be 
the  dynamo  behind  the  Teutonic  trade  recovery.  These 
banks — the  Deutsche,  Dresdener,  Disconto  and  Darm- 
stadter  institutions — the  four  famous  "D's" — have 
sunk  their  past  bitter  competition  in  the  larger  desire 
to  recoup  the  shattered  fortunes  of  the  Fatherland. 
They  will  have  a  real  antagonist  in  the  British  money 
trust,  whose  operations  should  make  Wall  Street  real- 
ize that  its  horizon  must  be  widened.  The  war  has 
taught  the  British  banker  the  one  great  secret  of 
international  banking,  which  is  putting  yourself  in  the 
other  man's  place,  finding  out  what  he  wants,  and  let- 
ting him  have  all  the  credit  he  wants.  Long-distance 
trade  demands  long  credits. 

The  banking  trust   represents  only  one  phase  of 


go  PEACE  AND  BUSINESS 

British  consolidation.  For  a  year  there  has  been  a 
real  epidemic  of  mergeritis.  British  Dyes,  Ltd.,  and 
Levinsteins,  the  two  largest  manufacturers  of  colors 
in  England,  have  joined  forces  for  a  combination  that 
will  develop  into  a  serious  rival  of  the  old  German  dye 
concerns.  Equally  significant  is  the  pooling  of  inter- 
ests of  the  two  greatest  British  chocolate  firms,  whose 
names  blaze  from  every  billboard  in  the  kingdom.  Just 
before  I  sailed  last  December  three  of  the  largest  ex- 
plosives manufacturers  were  planning  a  union,  with 
the  idea  of  turning  to  peaceful  output  with  as  little 
duplication  of  products  as  possible.  Everywhere  in 
England  the  keynote  is  "We  must  stand  together." 
The  country  is  developing  into  a  huge  trust. 

Just  as  finance,  as  expressed  in  credit,  is  the  life- 
blood  of  business,  so  is  transportation  the  chief  artery. 
Banking  and  shipping  have  always  been  the  bulwarks 
of  British  trade.  So  far  as  the  former  is  concerned 
you  have  seen  how  a  whole  new  battleline  has  been 
set  up.  With  shipping  the  outlook  is  not  so  rosy.  The 
slaughter  of  British  ships  by  the  submarine  has  put  a 
dent  into  a  one-time  supremacy  of  the  sea.  Though 
war  construction  ceased  on  the  day  the  armistice  was 
signed,  and  the  Clyde  and  other  regions  reverted  to  the 
construction  of  cargo  carriers  at  once,  England  is  still 
considerably  crippled,  and  will  continue  so  for  at  least 
a  year. 

With  her  railways  England  has  learned  a  supreme 
lesson  not  without  its  helpful  hints  for  us  in  our  own 
hour  of  possible  transition  from  government  to  private 
ownership.     At  the  outbreak  of  war  all  the  British 


THE  NEW  BRITAIN  6i 


lines  were  taken  over  by  the  government.  In  time  they 
will  be  restored  to  the  stockholders  but,  to  quote  a  high 
Government  official,  "they  will  never  again  have  the 
same  freedom  of  action."  Why?  Simply  because  the 
national  operation  of  the  roads  showed  that  the  waste 
had  been  prodigal.  Sir  Albert  Stanley  told  me  that 
the  wastage  in  the  combined  British  system  was  not 
less  than  $200,000,000  a  year. 

The  most  striking  feature  of  British  railway  reor- 
ganization on  a  peace  basis,  aside  from  the  fact  that 
an  eight-hour  day  has  been  granted,  is  the  standardiza- 
tion of  equipment,  which  will  extend  from  spikes  to 
sleeping  cars.  In  addition  traffic  is  being  equalized. 
In  some  parts  of  England,  for  example,  it  has  been  too 
dense;  in  other  sections  too  scant.  A  definite  scheme 
of  equalization  of  operation  has  been  worked  out  so 
that  the  whole  Kingdom  will  have  adequate  trans- 
portation facilities.  It  is  estimated  that  the  whole 
process  of  railway  reorganization  in  England  will 
mean  upon  completion  a  saving  of  not  less  than  half 
a  billion  dollars. 

Five  years  ago  the  statement  that  the  aerial  omnibus 
was  practical  would  have  evoked  ridicule.  The  war 
has  made  commercial  aviation  possible,  and  in  no  other 
country,  save  perhaps  in  Germany,  has  this  possibility 
been  seen  or  snapped  up  so  swiftly  as  in  England, 
Within  forty-eight  hours  after  the  victory  celebrations 
had  begun  tickets  were  being  sold  for  an  air  service 
between  London  and  Paris.  The  schedule  calls  for 
departure  from  the  Ritz  Hotel  in  the  British  capital 
at  ten  o'clock  in  the  morning  and  arrival  at  the  Ritz 


62.  PEACE  AND  BUSINESS 

in  Paris  at  one-thirty  in  the  afternoon.  The  price  of 
tickets  is  fifteen  guineas,  or  about  seventy-five  dollars, 
each  way.  This  London-to-Paris  service  is  merely  a 
hint  of  the  part  that  aviation  will  play  in  the  drama 
of  world  commerce.  The  universal  air  routes  are  be- 
ing charted.  A  company  has  been  formed  in  London 
to  operate  a  twelve-hour  service  between  London  and 
Rome.  Likewise  a  service  between  the  Mother  Coun- 
try and  Australia  is  being  discussed. 

Any  study  of  British  reconstruction  must  be  in  terms 
of  Empire.  Never  again  can  England  be  deaf  to  the 
need  or  call  of  the  Colonies.  The  imperial  blood- 
brotherhood,  cemented  by  sacrifice  from  Ypres  to  Gal- 
lipoli,  means  an  alliance  no  less  potent  or  powerful  in 
peace  than  in  war.  So  far  as  Canada  is  concerned 
there  is  no  problem.  She  is  our  neighbor  and  sister 
breathing  the  same  air  and  aglow  with  the  same  free- 
dom and  action.  Our  new  kinship  will  be  with  Aus- 
tralia, that  gallant  fellow-democracy  whose  heroic 
achievements  of  the  war  ended  her  old  isolation.  Be- 
fore the  war  Australia  seemed  in  the  popular  mind 
to  be  a  far-away  place — a  vast  sheep  ranch  peopled  by 
ticket-of -leave  men.  The  war  literally  brought  Aus- 
tralia home  to  England,  and  likewise  to  America,  for 
our  troops  in  France  and  England  have  found  them 
congenial  fighting  fellows. 

There  is  a  deeper  affinity  between  America  and  Aus- 
tralia than  this  breezy  comradeship.  It  lies  in  our 
common  responsibility  in  the  southern  Pacific,  where 
Germany  had  begun  to  rear  a  whole  new  empire  of 
trade,  which  had  the  usual  adaptability  to  war.    What 


THE  NEW  BRITAIN  63 


the  average  American  perhaps  does  not  reahze  is  the 
fact  that  the  Kaiser  was  strongly  intrenched  at  New 
Guinea,  New  Britain,  the  Caroline  and  Marshall  Isl- 
ands and  in  Samoa.  These  islands  not  only  com- 
manded the  trade  routes  in  that  section  of  the  globe 
but  were  likewise  the  key  to  Australia.  Of  a  total 
estimated  population  of  1,500,000  in  those  islands  the 
German  possessions  contained  nearly  800,000.  They 
presented  as  artistic  a  piece  of  German  penetration  as 
could  be  found  anywhere.  Outwardly  they  were  the 
bailiwicks  of  ordinary  peaceful  trade;  inwardly  they 
were  potential  strongholds  of  war.  The  cliffs  hid  pow- 
erful wireless  stations;  the  harbors  were  ideal  naval 
bases;  immense  supplies  for  sea  raiders  were  cached 
far  inland.  These  islands  represented  one  of  the  many 
German  war  traps  that  needed  only  the  press  of  a 
button  to  be  sprung  into  destructive  action. 

With  the  outbreak  of  the  war  Australia,  with  the 
help  of  New  Zealand,  captured  these  islands.  She  does 
not  want  to  give  them  up.  Here  is  where  we  come  in. 
Through  our  stake  in  the  Pacific — principally  the  Phil- 
ippines and  our  growing  world  trade — we  shared  the 
German  danger  with  Australia  before  the  war.  Had 
the  boche  won,  our  overseas  enterprises  would  have 
suffered  with  those  of  the  British  Dominions.  The 
German  would  have  ruthlessly  ruled  that  neck  of  the 
globe,  and  no  other  nation  would  have  had  a  look-in 
on  commerce.  If  Germany  is  to  remain  beaten  com- 
mercially in  the  same  way  that  she  has  been  vanquished 
on  the  field  of  battle  she  must  not  be  permitted  to 
fasten  her  hooks  into  those  Pacific  islands  again. 


64  PEACE  AND  BUSINESS 

Australia  realizes  that  her  full  partner  in  the  Pacific 
is  America,  The  voice  of  the  commonwealth  is  W.  M. 
Hughes,  that  remarkable  personage  who  rose  from 
peddler  to  premier.  It  was  he  who  first  declared  eco- 
nomic war  on  Germany;  who  smashed  the  enemy 
monopoly  on  the  antipodean  metal  fields ;  who  broke 
like  the  wrath  of  an  angry  god  over  England  in  191 6 
and  roused  the  Kingdom  to  her  post-war  commercial 
responsibilities. 

So  to  Hughes,  who  was  in  England  for  the  imperial 
conference,  I  went  to  talk  about  America  in  the  Pacific. 
In  the  great  war  it  was  my  privilege  to  see  many  strik- 
ing contrasts  that  were  always  the  product  of  troubled 
hour  and  circumstance.  There  was,  for  example,  an 
unforgetable  interview  in  Petrograd  with  Kerensky, 
then  at  the  heighth  of  his  triumph,  in  a  shabby,  white- 
washed room  while  thousands  clamored  outside  for  an 
interview.  There  was  a  winter  walk  with  Sir  Douglas 
Haig  through  a  wood  in  France  while  less  than  twenty 
miles  away  the  booming  tides  of  death  rose  and  fell. 
There  was  also  that  day  when  I  sat  with  Lloyd  George. 
the  one-time  Apostle  of  Peace  who  at  that  moment 
occupied  the  chair  of  Kitchener,  the  War  Lord.  In 
all  that  gallery  of  dramatic  extremes  no  experience  in 
some  respects  was  more  striking  than  the  evening  with 
Hughes  in  front  of  the  fire  at  a  modest  house  at 
Hampstead  in  the  suburbs  of  London. 

It  was  a  few  nights  after  the  signing  of  the  armis- 
tice. Behind  me  I  had  left  a  London  delirious  with 
delight  and  tasting  the  first  fruits  of  victory.  In  what 
seemed  to  be  a  thousand  miles  away  from  all  the 


THE  NEW  BRITAIN  65 

tumult  and  the  shouting  sat  this  little,  keen-eyed, 
torrent-tongued  leader,  who  with  his  people  had  played 
such  a  big  part  in  achieving  the  stupendous  results.  He 
spoke,  as  always,  with  a  passionate  energy. 

"America  and  Australia  have  much  in  common,"  he 
said.  "We  not  only  speak  the  same  language,  think 
the  same  thoughts,  spring  in  the  main  from  the  same 
stock  and  are  animated  by  the  same  ideals,  but  we  have 
fought  side  by  side  for  the  cause  which,  with  peace, 
has  a  new  kinship  for  us.  Together  with  New  Zealand 
we  have  a  community  of  economic  interests  in  the 
Pacific  that,  thanks  to  the  German  madness,  is  just 
being  appreciated.  The  Panama  Canal  has  linked  the 
Pacific  to  Europe.  The  volume  of  world  commerce 
and  its  center  of  gravity  have  tended  more  and  more 
toward  the  Pacific.  It  is  bound  to  be  one  of  the  great 
new  trade  domains.  Ever  since  they  first  set  foot  in 
those  parts  the  Germans  have  been  a  menace  no  less 
to  America  than  to  Australia  and  New  Zealand.  Now 
that  their  stamping  ground  for  penetration  has  been 
taken  away  from  them  it  must  never  go  back.  Aus- 
tralia is  committed  to  a  Monroe  Doctrine  of  the 
southern  Pacific,  and  its  integrity  must  be  maintained. 
Our  warning  to  the  Germans  is :  'Hands  off  the 
Pacific'  " 

I  asked  Mr.  Hughes  about  the  prospects  of  a  closer 
commercial  bond  with  Australia  and  he  said:  "Aus- 
tralia looks  forward  to  a  new  and  intimate  business 
relation  with  the  United  States.  We  have  sent  a  trade 
commissioner  to  New  York  to  the  end  that  American 
capital  and  American  enterprise  find  their  way  to  our 


66  PEACE  AND  BUSINESS 

country,  which  is  a  whole  new  world  awaiting  develop- 
ment and  which  is  capable  of  maintaining  100,000,000 
people.  You  need  our  wool,  meat  and  fruit,  and  we 
need  your  machinery,  wood  and  many  other  things. 
The  peoples  of  Australia  and  America  must  know  each 
other  better  and  trade  with  each  other  more." 

Now  for  the  final  glimpse  of  British  reconstruction, 
which  brings  us  back  to  England.  The  machine  of 
recovery,  whose  flywheel  began  to  whirl  on  the  day 
the  Germans  collapsed,  faces  only  one  real  danger, 
which  is  also  a  world  danger.  It  is  embodied  in  labor. 
The  battalions  of  toil  can  undo  or  accelerate  the  whole 
vast  program  of  rehabilitation.  Nowhere  else  in 
Europe  is  there  such  unrest  in  labor  as  in  England. 
The  enormous  wages  paid  during  the  war  created 
tastes  and  habits  that  demand  a  continuance  of  the 
swollen  pay  envelopes.  Unemployment  will  upset  the 
whole  scheme  of  things.  The  great  revival  projects, 
together  with  the  immense  schemes  for  housing,  may 
be  able  to  keep  the  workers  busy.  If  they  are  kept 
busy  there  will  be  no  time  to  foment  trouble.  If  not, 
all  the  well-laid  plans  are  liable  to  suffer  a  serious 
setback.  No  man  can  tell  what  the  Labor  Morrow 
will  bring  forth. 

From  one  European  change,  however,  England  is 
immune.  The  war  which  made  the  world  safe  for 
democrats  has  also  made  it  decidedly  unsafe  for 
royalists,  as  William  Hohenzollern  has  learned.  Amid 
"the  old  dynasties  breaking  up  in  thunder"  King 
George  sits  serene.  His  job  is  safe.  When  all  is  said 
and  done  he  is  really  head  of  a  crowned  republic.    In 


THE  NEW  BRITAIN  67 


no  other  monarchy  is  the  idea  of  kingship  so  firmly 
rooted.  It  is  a  national  habit.  In  this  loyalty  lies 
insurance  against  the  abrupt  economic  dislocation  that 
always  attends  the  overthrow  of  a  form  of  govern- 
ment. 

England  has  learned  much  these  past  four  years. 
Animating  the  nation  is  the  Spirit  of  a  Constructive 
Endeavor  that  has  flowered  out  of  the  wastes  of  war. 
Gone  forever  is  the  sloth  that  fettered  the  Britisher  of 
other  days  whose  week-end  holiday  lasted  from  Friday 
until  Tuesday ;  who  placed  sport  above  work,  and  who 
looked  upon  trade  with  contempt.  The  faith  of  the 
fathers  was  good  enough  for  him. 

The  drowsy  ease  of  old  cathedral  towns  has  been 
shaken  by  the  rumble  of  heavy  artillery,  the  immemo- 
rial turf,  undisturbed  by  the  march  of  centuries,  now 
teems  with  garden  truck.  Cabbages  grow  where  kings 
and  dukes  once  disported.  Amid  the  mud  of  Flanders, 
the  deserts  of  Mesopotamia,  down  on  the  ^gean,  and 
across  the  stretches  of  the  North  Sea,  was  bom  the 
kindling  sense  of  work  and  responsibihty  with  which 
Britain  faces  the  future. 

With  it  has  come  a  real  understanding  of  America. 
Before  the  war  the  average  Yankee,  with  a  cynicism 
which  was  a  phase  of  provincialism,  viewed  the  Eng- 
lishman with  suspicion  mixed  with  amusement.  In 
the  same  way  the  Briton  regarded  the  American  as  a 
crude,  noisy  and  impossible  person.  That  mutual  ig- 
norance has  been  succeeded  by  mutual  regard.  We 
will  be  keen  rivals  in  trade  but  we  will  also  be  friends. 

Once  I  talked  with  Doctor  Addison  about  the  Anglo- 


68  PEACE  AND  BUSINESS 

Saxon  kinship.  He  said,  "For  years  we  have  played 
at  cross  purposes.  The  war  has  brought  us  together 
and  together  we  must  stand  in  the  great  task  of 
restoration.  The  combination  of  American  idealism 
and  British  tenacity  will  be  irresisitible." 


II — France  and  the  Future 


I 

LONG  before  the  last  transport  steamed  home- 
ward with  its  freight  of  trench-tried  doughboys 
the  constructive  effect  of  their  presence  had  been 
seen  and  felt  throughout  the  length  and  breadth  of 
France.  We  have  not  only  helped  to  make  the  world 
safe  for  democracy  but  with  word  and  deed — princi- 
pally deed — we  have  shown  our  sister  republic  how  to 
be  more  efficient  and  therefore  more  prosperous.  This 
near-Americanization  of  our  Ally  must  stand  out  pre- 
eminently in  any  forecast  of  the  results  of  the  War  of 
Wars.  It  has  tremendous  significance  for  the  future 
world  trade  program. 

War,  however  hideous  or  prolonged,  always  ends, 
as  we  have  discovered,  but  Business,  which  makes  war 
possible  and  which  provides  the  universal  meal  ticket, 
goes  on  forever.  For  more  than  four  years  a  stupen- 
dous and  passionate  energy  was  geared  up  to  a  monster 
endeavor  regardless  of  price  or  sacrifice.  Production 
meant  Destruction.  All  this  is  changed.  The  same 
titanic  effort  is  now  diverted  to  rehabilitation.  Pro- 
duction must  spell  Prosperity  in  the  swift  and  blood- 
less transition.  The  time  is  at  hand  when  the  world 
must  take  stock  of  itself — make  some  inventory  of  the 

69 


70  PEACE  AND  BUSINESS 

price  of  conflict,  and  likewise  appraise  the  inevitable 
economic  compensations. 

When  you  analyze  the  effect  of  war  on  trade  you 
find  in  the  afterglow  of  tlie  conflagration  which  red- 
dened the  world  that  they  have  a  curious  affinity.  The 
struggle  which  humbled  the  Kaiser  was  really  rooted  in 
the  commercial  aggression  of  Germany,  no  less  arro- 
gant than  her  ruthless  military  authority.  No  Ameri- 
can need  now  be  told  that  the  Teutonic  factory  of 
peace  was  the  full  if  silent  partner  of  the  arsenal  that 
piled  up  the  implements  of  death  against  the  dawn  of 
the  great  day  that  was  to  proclaim  the  undisputed 
might  of  Pan-Germanism.  That  might  bore  the  stamp 
of  the  Gennan  mark. 

With  this  dream  shattered  it  is  interesting  to  dissect 
the  costly  and  tragic  disillusion.  The  Pan-German — 
and  by  him  I  mean  the  German  commercial  and  finan- 
cial overlord  of  the  type  of  Helfferich  and  Gwinner, 
the  directors  of  the  Deutsche  Bank — looked  upon  the 
war  as  a  definite  piece  of  good  business  for  Germany. 
Bulwarked  by  years  of  intensive  preparation  which  put 
an  unprecendented  burden  of  taxation  upon  the  Ger- 
man people,  and  with  a  characteristically  Prussian  con- 
fidence which  was  just  another  name  for  colossal  stu- 
pidity they — and  they  were  simply  the  stool  pigeons 
of  the  Kaiser — held  that  with  France  at  their  feet, 
Britain  humbled,  Italy  prostrate  and  America  rebuked, 
the  universe  of  profit  was  theirs.  The  whole  far-flung, 
subtle  and  sinister  German  economic  penetration  of  the 
last  fifteen  years  had  war  in  view,  and  that  war  the 
grim  means  to  a  world-wide  economic  mastery. 


FRANCE  AND  THE  FUTURE     71 

Go  back  for  a  moment  to  the  beginning  of  the 
bloody  struggle  and  you  realize  that  one  reason  for  the 
Kaiser's  collapse  was  his  extraordinary  lack  of  judg- 
ment. In  the  American  vernacular,  his  "dope"  was  all 
wrong.  He  thought,  for  example,  that  while  his  gray 
hordes  rushed  like  whirlwinds  of  fury  through  Bel- 
gium and  France  on  the  one  hand,  and  tossed  off 
Russian  legions  on  the  other,  Britain  would  be  helpless 
by  reason  of  civil  strife.  But  Britain  gave  him  his 
first  great  jolt.  She  not  only  rushed  to  the  relief 
of  Belgium  but  the  cubs  of  the  Lioness  rallied  from 
the  Seven  Seas.  Instead  of  rending  the  empire  asun- 
der the  Kaiser  bound  it  with  bonds  of  blood  and  knit 
an  undying  kinship.  He  made  the  same  mistake  with 
America.  He  looked  upon  us  with  scorn  and  con- 
tempt, only  to  find  to  his  sorrow  that  the  potential 
strength  of  the  democracy  of  Lincoln  and  Lee  was 
one  of  the  vital  constitutions  to  his  ruin. 

Those  smug  Pan-Germans  who,  linking  trade  with 
militarism,  looked  upon  war  as  good  business  got  the 
surprise  of  their  lives.  In  one  way  they  were  right. 
War  did  become  a  business,  but  with  this  difference — 
it  became  the  business  of  the  civilized  world  to  over- 
throw the  Prussian  monster.  In  hurling  him  from  his 
brutal  eminence  Europe  has  not  only  been  sterilized 
against  future  military  aggression  but  at  the  same  time 
every  nation  on  the  ineffable  roll  of  honor  which  bears 
the  names  of  the  Allies  emerged  from  the  stupendous 
struggle,  poorer  in  her  man  power,  deeper  in  debt,  yet 
richer  in  knowledge  and  better  equipped  to  undertake 


y2  PEACE  AND  BUSINESS 

the  colossal  work  of  economic  regeneration  which  is 
henceforth  the  supreme  task  of  the  world. 

Years  before  the  first  expeditionary  force  landed  at 
St.  Nazaire  the  intelligent  Yankee  who  knew  anything 
about  Europe  felt,  with  that  great  statesman  of  other 
days,  that  "Every  American  has  two  countries — his 
own  and  France."  Fighting  side  by  side  with  France, 
and  in  France,  only  intensified  this  feeling.  Though 
there  is  no  sentiment  in  business  it  is  bound  to  have  a 
tremendous  effect  on  the  future  commercial  relations 
between  the  two  countries.  It  is  no  exaggeration  or 
eagle-screaming  to  say  that  no  other  Allied  Power  has 
left  such  a  deep  impression  on  French  Hfe,  habits  and 
commerce  as  America.  Millions  of  our  soldiers  have 
not  only  gone  to  France  but  literally  have  spread  over 
the  entire  country.  A  comparison  with  British  activ- 
ities will  show  what  I  mean.  The  British  were  con- 
fined to  a  comparatively  small  area  of  the  country.  I 
made  more  than  one  trip  through  the  whole  zone  of 
the  British  Armies  ranging  from  port  to  trench,  and 
it  was  a  brief  journey.  They  entered  the  war  at  the 
start;  they  were  able  to  secure  the  channel  ports,  which 
made  their  lines  of  communication  short.  The  British 
war  section  was  therefore  compact  and  accessible  to 
the  mother  island. 

America,  on  the  other  hand,  came  into  the  war  last. 
The  channel  ports  were  already  occupied.  She  had  to 
take  the  Atlantic  gateways  in  the  south.  The  net 
result  was  that  her  lines  of  communication  overseas 
had  to  extend  practically  from  the  Mediterranean  to 
Alsace-Lorraine.     It  meant  that  the  American  Army 


FRANCE  AND  THE  FUTURE     73 

was  scattered  over  more  than  half  of  France.  Our 
troops  have  been  everywhere,  and  this  is  why  I  say 
that  having  touched  so  much  of  the  land  their  influence 
will  be  felt  throughout  the  nation. 

The  American  soldier  is  a  friendly  being.  He  lacks 
the  reserve  of  the  British  and  he  likes  to  make  himself 
at  home.  This  intercourse  backed  up  by  the  wide 
range  of  his  operations  naturally  gave  him  a  decided 
social  advantage  over  his  British  comrade. 

But  this  is  only  one  reason  why  the  Yankee  impres- 
sion in  France  will  be  the  strongest  and  the  most  last- 
ing. From  sea  almost  up  to  where  the  guns  boomed 
we  laid  the  hand  of  a  galvanic  endeavor  upon  the  land. 
It  was  recorded  in  docks  that  grew  out  of  swamps  and 
marshes;  in  enormous  supply  cities  that  rose  almost 
overnight  where  vineyards  and  farms  had  drowsed; 
in  hundreds  of  miles  of  new  railway  tracks  over  which 
rushed  great  American  locomotives.  We  speeded  up 
output,  dramatized  the  spirit  of  "do  it  now" ;  and  all 
under  the  drive  of  an  acute  war  necessity.  Peace  will 
reap  the  benefit. 

Some  of  this  work  has  been  temporary  and  merely 
met  the  need  of  emergency.  The  wooden  warehouses 
will  fall  away  under  the  fierce  onslaught  of  wind  and 
weather ;  the  average  life  of  most  of  the  docks  that  we 
built  is  only  forty  years;  the  gridiron  of  tracks  and 
switches  will  become  part  of  the  French  railways  sys- 
tems in  time,  even  as  the  record  of  the  deeds  of  the 
doughboy  will  merge  into  the  history  of  the  Allied 
achievement.  The  really  permanent  thing  will  be  the 
lesson  of  speed  and  efficiency  registered  by  American 


74  PEACE  AND  BUSINESS 

engineers  and  American  builders,  which  will  inevitably 
shape  and  influence  the  social  and  industrial  future  of 
France.  With  this  galvanization  of  factory  and  fire- 
side, its  effect  upon  the  commerce  of  the  country  and, 
what  is  equally  important,  upon  the  foreign  trade  of 
America,  we  are  mainly  concerned. 

All  things  begin  with  the  human  being,  so  we  will 
first  take  the  human  element.  The  American,  as  we 
all  know,  is  intensely  human,  and  he  finds  a  full- 
blooded  brother  in  the  volatile  and  emotional  Gaul. 
We  Americans  have  shown  in  countless  ways — more 
especially  in  the  swift  elevation  and  almost  immediate 
demolition  of  our  popular  heroes — that  we  are  nearly 
as  Latin  as  we  are  Anglo-Saxon. 

A  great  Englishman  whose  name  is  inseparably 
bound  up  in  the  glories  of  the  war  once  said  that  the 
Frenchman  is  "part  child,  part  man  and  part  woman." 
Knowing  this  you  can  readily  understand  how  easy  it 
has  been  for  the  American  to  get  on  with  him.  De- 
spite this  na'ive  quality  the  Frenchman's  eye  is  always 
on  the  main  business  chance.  He  has  given  the  Amer- 
ican soldier  concrete  evidences  of  his  thrift. 

Yet  the  doughboy  bears  him  no  ill  will  for  it.  The 
war  has  been  a  great  adventure  for  the  overseas  Amer- 
ican, and  whether  he  stays  in  France  or  goes  home  it 
has  made  him  a  world  citizen.  He  is  grateful  for  the 
opportunity  to  broaden  and  learn.  He  will  be  better 
equipped  for  whatever  job  he  tackles  after  the  war. 

Go  to  a  barber  shop  in  Paris  or  any  other  big 
French  city  and  if  the  barber  speaks  English  he  will 
say :  "Pll  give  you  a  quick  shave."    In  a  country  where 


FRANCE  AND  THE  FUTURE     75 

shaving  is  almost  as  great  a  rite  as  eating  this  is 
revolutionary. 

When  you  touch  the  matter  of  food — which  is  one 
of  the  glories  of  France — you  touch  the  bailiwick  that 
has  been  speeded  up  perhaps  more  than  any  other.  Let 
me  illustrate :  For  many  years  there  was  a  certain  res- 
taurant in  Paris  famous  for  its  food  and  for  the  dis- 
tinction with  which  it  was  served.  It  was  character- 
istically French  in  its  atmosphere  in  that  the  rapid- 
fire  American  tourist  had  overlooked  it  in  his  hunt  for 
a  Continental  lobster  palace  with  gilt  and  noise.  It 
was  quiet  and  dignified.  Each  meal  was  a  work  of 
art  to  be  reveled  in. 

One  night  in  September,  19 18,  I  went  there  to  dine. 
I  had  not  visited  the  place  since  the  American  partici- 
pation in  the  war.  I  ordered  a  modest  dinner  and  sat 
back  to  indulge  in  the  anticipation  which  is  always  the 
prelude  to  a  real  French  meal.  To  my  horror  and 
almost  before  I  realized  it  the  waiter  not  only  brought 
the  food  but  everything  I  had  ordered  at  the  same 
time. 

When  I  protested  he  said :  "I  thought  you  wanted 
your  dinner  in  the  American  manner." 

He  was  not  to  blame.  The  fault  lay  with  the  quick- 
lunch  habit  of  the  American. 

Whole  French  communities  show  the  effect  of  the 
American  invasion,  and  more  especially  those  towns 
that  have  been  our  ports  of  entry  and  in  which  we 
have  established  important  supply  headquarters.  The 
shops  are  busy  and  bustling.  The  more  enterprising 
have  abandoned  the  archaic  habit  of  closing  their  doors 


76  PEACE  AND  BUSINESS 


from  twelve  to  two  during  the  sacred  hour  of  de- 
jeuner. These  communities  will  never  go  back  to  the 
old  ways,  because  there  will  always  be  Americans  to 
serve. 

Scores  of  French  towns  have  been  economically  re- 
born thanks  to  the  American  occupation.  They  have 
had  such  a  flood  of  prosperity  that  they  are  able  to 
face  peace  with  full  pockets  even  though  their  hearts 
are  saddened  over  the  loss  of  loved  ones.  I  am  not 
exaggerating  when  I  say  that  the  money  spent  by  the 
American  and  British  expeditionary  forces  throughout 
France  will  help  toward  compensating  the  country  for 
the  cost  of  the  war.  Only  the  dead  that  sleep  on  the 
hillsides  will  never  come  back.  The  great  and  irrep- 
arable loss  of  France  is  the  loss  of  her  men,  for  which 
no  material  gain  can  ever  compensate. 

The  French  newspapers  have  thoroughly  caught  the 
spirit  of  American  promise  and  exploitation.  I  have 
before  me  an  advertisement  cut  out  of  a  Parisian  jour- 
nal during  the  war  which  might  well  have  appeared  in 
a  New  York  daily.  It  begins  like  this :  "O  Boy !  what 
can  we  send  you  ?"  The  next  lines  are :  "We  can  mail 
you  to  the  trenches  anything  from  a  packet  of  gum  to 
a  grand  piano.  We  give  you  a  square  deal,  bed-rock 
prices,  and  your  money  back  if  we  fail  to  please." 
Could  anyone  ask  more! 

Thanks  to  the  American  invasion  the  Frenchman  Is 
reforming  his  writing  habit.  It  has  been  said  that  if 
you  give  a  Frenchman  a  fountain  pen  and  a  ream  of 
paper  he  will  write  himself  to  death.  It  is  the  favorite 
indoor  sport,    The  traveler  has  innumerable  evidences 


FRANCE  AND  THE  FUTURE     jj 

of  this.  Everything  that  used  to  happen  in  a  French 
shop  was  carefully  written  in  a  big  book.  No  one 
ever  knew  what  became  of  this  book  but  there  was  a 
general  impression,  certainly  among  Americans,  that  it 
involved  an  immense  amount  of  useless  labor.  Such 
was  the  so-called  bureau  habit.  The  French  shop- 
keeper is  not  so  keen  about  writing  everything  down 
now.  The  more  advanced  are  using  adding  machines, 
cash  registers  and  typewriters.  Formerly  they  got 
some  of  these  from  their  German  neighbor  but  it  is 
not  likely  that  this  one-time  source  of  supply  will  be 
resumed.  France  intends  to  manufacture  these  articles 
herself. 

Changing  France  is  a  marvel  of  adaptability.  It 
found  no  more  picturesque  expression  than  an  episode 
that  happened  in  October  at  the  chateau  of  a  famous 
French  prince  whose  name  and  title  were  almost  as 
old  as  the  nation  itself.  His  country  house,  a  center 
of  fashion  when  Louis  XIV  was  king,  and  across 
whose  shining  moat  rode  the  beauty  and  chivalry  of 
many  generations  of  French  nobility,  was  not  far  from 
a  temporary  camp  of  an  American  Signal  Corps  unit 
engaged  in  stringing  a  new  telephone  service  from 
Tours  to  Paris. 

While  out  riding  one  day  the  prince  happened  on 
this  camp.  He  was  so  much  impressed  with  the  busi- 
nessHke  manner  and  personality  of  the  men  that  he 
invited  them  to  his  chateau  for  tea.  They  arrived  in 
a  five-ton  truck  that  clattered  noisily  up  the  imposing 
tree-arched  avenue  and  whose  din  was  in  sharp  con- 
trast with  the  exquisite  aloofness  of  the  place.     The 


78  PEACE  AND  BUSINESS 

prince  received  the  men  in  the  stately  salon  where 
kings  and  princes  had  sat  in  state,  praised  their  strong 
Virginia  cigarettes,  learned  how  to  roll  the  army 
"smoke,"  and  reveled  in  undiluted  American  slang. 
The  soldiers  had  the  time  of  their  lives,  and  when 
they  climbed  up  on  the  big  gray  truck  to  go  away 
they  united  in  giving  their  host  an  ear-splitting  Amer- 
ican college  yell  the  like  of  which  had  never  shaken 
the  corridors  of  the  old  chateau. 

Here  is  another  instance  of  the  mingling  of  the 
French  aristocracy  with  American  democracy.  A  cer- 
tain marquis  with  a  title  as  long  and  as  ancient  as  a 
page  in  the  Book  of  Kings  was  unable  to  occupy  his 
summer  home,  located  near  one  of  the  large  base  ports 
used  by  the  Americans,  because  he  could  not  get  a  van 
to  transport  his  household  effects.  When  the  major  in 
charge  of  the  A.E.F.  Motor  Transport  Depot  near  by 
— he  was  a  reformed  Indiana  politician,  by  the  way — 
heard  of  the  predicament  he  loaned  the  marquis  a  five- 
ton  army  truck  for  the  job.  The  old  aristocrat  was 
so  delighted  with  this  act  of  kindness  that  he  made 
the  trip  on  the  truck  itself.  This  led  to  a  charming 
social  relation  between  the  French  family  and  the 
officers  of  the  port.  The  American  has  gone  over 
the  social  top  just  as  successfully  as  he  has  gone  over 
the  fighting  top. 

I  know  of  no  better  way  to  sum  up  the  spectacle 
of  changing  France  than  to  quote  what  a  keen-witted 
Frenchwoman  said  to  me  at  Tours.  Not  in  complaint 
but  almost  in  pride  she  remarked :  "France  will  never 
be  the  same  France  again.    Just  as  Ypres  will  hence- 


FRANCE  AND  THE  FUTURE     79 


forth  be  Wipers  so  will  Paree  be  Paris — pronounced 
in  the  forceful  American  way.  We  shall  have  electric 
bells  and  bathtubs  everywhere,  but  the  country  will  be 
the  better  for  it." 

This  evolution  is  a  direct  result  of  the  coming  of  the 
American  millions.  Before  the  war  there  were  exactly 
40,000  Americans  residing  permanently  in  France. 
Our  participation  in  the  war  will  undoubtedly  extend 
this  list  up  to  a  hundred  thousand.  Many  of  our  men 
will  return  to  France  as  soon  as  they  are  mustered 
out.  Some  have  already  intermarried  with  the  French ; 
others  are  engaged  to  marry  French  girls ;  still  others 
have  hopes.  Intermarriage  reached  the  point  where  it 
was  no  uncommon  experience  to  see  in  the  papers  ad- 
vertisements of  lawyers  who  specialized  in  arranging 
the  legal  details  of  Franco-American  marriages.  It  all 
means  that  the  two  countries  will  or  should  understand 
each  other  as  never  before. 

This  understanding  is  not  entirely  born  of  kinship 
of  the  battle  line.  History  shows  that  the  allies  of  one 
year  may  and  have  become  the  foes  of  another.  The 
greatest  of  all  internationalizers  is  a  common  knowl- 
edge of  language.  This  has  always  been  the  barrier 
in  Franco-American  trade,  and  now,  thanks  to  the 
presence  of  millions  of  American  fighting  men  in 
France,  that  barrier  is  removed. 

The  old  language  obstacle  between  America  and 
France  was  very  much  like  the  channel  obstacle  be- 
tween England  and  France.  It  was  not  Waterloo  but 
the  comparatively  few  miles  of  choppy  sea  that  sep- 


8o  PEACE  AND  BUSINESS 

arate  Dover  and  Calais,  that  prevented  a  closer  affinity 
between  these  two  great  neighbors  now  joined  in  the 
brotherhood  of  victory  over  a  common  foe.  A  famous 
Frenchman  whose  name  was  almost  a  household  word 
in  England  was  once  asked  by  a  British  diplomat  when 
he  had  last  visited  London.  He  replied :  "I  have  not 
been  in  England  for  fifteen  years.  If  it  were  not  for 
the  channel,  however,  I  should  spend  every  week-end 
there."  The  inevitable  construction  of  a  tunnel  under 
the  English  Channel  will  do  more  to  cement  the  ties 
between  England  and  France  than  a  hundred  years  of 
diplomatic  conversation.  This,  however,  will  be  dealt 
with  in  a  later  article. 

The  ability  with  which  the  American  soldier  mas- 
tered the  curves  of  the  French  language  is  one  of  the 
wonders  of  the  war.  Back  in  1915  and  1916  when  I 
spent  some  time  with  the  British  Army  I  used  to  mar- 
vel at  the  way  Tommy  and  Jock  got  on  with  the  French 
peasants.  I  frequently  saw  them  seated  at  the  fire- 
sides at  night  chatting  away  volubly  with  the  old  and 
the  young,  with  whom  they  were  great  favorites.  De- 
spite the  obvious  melee  of  speech  they  seemed  to  under- 
stand each  other.  The  same  thing  happened  with  the 
American.  In  one  of  my  investigations  in  the  Services 
of  Supply  of  the  A.E.F.  I  temporarily  had  a  chauffeur 
who  had  been  a  fire-truck  driver  in  an  Ohio  town  who 
had  been  in  France  only  six  weeks.  Until  he  struck 
the  shores  of  the  land  of  battle  he  probably  never  had 
heard  a  word  of  French.  Yet  he  was  able  to  ask 
directions  for  our  journey,  and  understood  everything 


FRANCE  AND  THE  FUTURE     8i 

that  was  said  to  him.  The  fact  that  milHons  of  Amer- 
icans will  have  a  working  knowledge  of  French  will 
be  an  immense  asset  to  them  in  world  reconstruction. 
French  has  been  and  always  will  be  the  language  of 
diplomacy.  In  the  same  way  it  is  likely  to  be — with 
the  exception  of  money — the  universal  speech  of  busi- 
ness after  the  war.  In  any  event  it  will  be  a  strong 
competitor  of  English. 

This  bilingual  performance  operates  both  ways.  Just 
as  our  men  have  secured  a  successful  stranglehold  on 
the  French  language  so  have  the  French  made  equal 
progress  with  English.  With  their  eternal  business  in- 
stinct they  were  quick  to  realize  that  one  first  aid  to 
quick  commercial  intercourse  with  the  American  sol- 
dier was  ability  to  speak  his  language.  The  French 
were  not  so  keen  to  learn  English  until  after  the  Amer- 
ican Army  arrived  in  numbers  and  scattered  itself 
throughout  the  country.  It  then  became  a  sort  of 
national  passion.  In  dozens  of  French  towns  I  have 
seen  tradesmen  poring  at  night  over  an  Anglo-French 
dictionary.  Typical  of  this  state  of  mind  is  the  fact 
that  one  of  the  best-known  French  newspapers,  Le 
Matin,  conducted  a  daily  lesson  In  English  for  the 
benefit  of  its  readers.  It  took  the  Frenchman  who  had 
had  contact  with  the  British  troops  a  considerable  time, 
however,  to  understand  the  difference  between  the 
English  language  and  American  slang.  More  than 
one  of  them  has  had  recourse  in  that  bromidic  but 
always  interesting  sign :  "English  and  American  spoken 
here." 


82  PEACE  AND  BUSINESS 

So  wide  has  become  the  desire  among  the  French  to 
speak  English  that  I  heard  a  clever  Parisienne  say: 
"If  I  don't  leave  France  soon  I'll  forget  all  the  French 
I  know."  There  was  more  truth  than  wit  in  the 
remark. 


FRANCE  AND  THE  FUTURE     83 


II 


This  more  or  less  airy  persiflage — illuminating  as  it 
may  be  in  reflecting  the  face  of  changing  France — is 
merely  the  prelude  to  the  real  thing.  The  important 
questions  are :  "How  has  the  American  Expeditionary 
Force  permanently  benefited  France,  and  what  will  be 
its  effect  upon  our  future  relations?"  America  went 
into  the  war  for  the  sake  of  a  great  ideal  but  the 
inevitable  and  unsought  by-product  of  that  high  par- 
ticipation will  be  something  practical  and  permanent. 

If  you  want  to  know  how  official  France  appraises 
the  American  influence  ask  any  member  of  the  cabinet 
and  you  will  get  full  indorsement  of  all  that  I  have 
written  in  this  chapter  and  considerably  more.  Per- 
haps the  most  significant  utterance  on  this  subject  was 
made  to  me  by  the  one  man  in  all  France  best  qualified 
to  speak.  I  refer  to  M.  Clementel,  the  Minister  of 
Commerce,  who  through  this  all-important  post  not 
only  helped  to  mobilize  French  industry  for  the  pro- 
duction of  munitions  of  war  but  will  have  an  equally 
important  task  in  unifying  it  for  the  bloodless  business 
battles  of  peace. 

I  went  to  see  him  in  the  Ministry,  which  occupies 
a  fine  old  palace  in  the  Rue  de  Crenelle  on  the  left  bank 
of  the  Seine.  In  a  drawing-room  which  looked  out 
on  the  park  where  fountains  played  I  talked  with  a 
busy  individual  whose  work  only  begins  anew  with  the 
end  of  the  war.     Lithe,  swarthy,  nervous;  with  keen 


84  PEACE  AND  BUSINESS 

black  eyes — he  speaks  with  an  animation  and  a  gesture 
that  are  typically  French.  Like  Secretary  Redfield  he 
was  a  successful  man  of  business  affairs  before  he 
entered  the  Government. 

I  asked  M.  Clementel  if  he  did  not  think  that  the 
Americans  and  their  vast  war  undertakings  would 
have  a  beneficial  and  stimulating  effect  on  the  develop- 
ment of  French  industry,  and  he  replied  without  the 
shghtest  hesitation  that  it  certainly  would. 

"Before  the  war,"  he  declared,  "most  of  our  busi- 
ness men,  manufacturers  and  engineers,  though  pos- 
sessing a  very  solid  education  and  a  thorough  knowl- 
edge of  their  trade,  worked  in  a  very  narrow  circle. 
They  gave  little  thought  to  big  development ;  they  were 
content  with  a  limited  income,  handing  down  their 
business  from  father  to  son  without  making  any  dras- 
tic changes.  The  arrival  of  the  Americans  stirred  them 
with  enthsuiasm.  It  has  even  galvanized  them.  Their 
vast  enterprises  have  filled  us  with  admiration.  A  port 
which  in  ordinary  times  would  have  required  six  years 
to  build  was  finished  by  them  in  six  months;  a  cold- 
storage  plant  generally  requiring  several  years  was 
constructed  In  a  few  weeks.  It  was  precisely  the  same 
with  the  great  repair  and  maintenance  shops  for  army 
material  and  transport.  All  these  facts  have  made  a 
deep  impression  on  my  compatriots  and  will  Inevitably 
lead  them  to  consider  operations  of  the  same  kind  and 
in  the  same  way." 

I  then  questioned  M.  Clementel  as  to  the  Influence  on 
private  Industry  that  might  be  expected  from  American 
co-operation.     He  responded  that  a  plan  was  under 


FRANCE  AND  THE  FUTURE     85 

consideration  to  develop  close  relations  between  Amer- 
ican and  French  capital  on  one  hand  and  between 
French  and  American  workmen  on  the  other.  He  said : 
"Industry  must  be  created  in  France  that  will  avoid 
the  importation  of  manufactured  products  from  Amer- 
ica. In  the  same  way  industry  must  be  established  in 
America  for  the  manufacture  of  the  French  products 
in  order  to  avoid  useless  transportation." 

M.  Clementel  then  cited  a  number  of  instance.  *Tn 
America,"  he  continued,  "the  textile  factories  which 
were  formerly  owned  by  Germans  and  which  have  been 
taken  over  by  the  Government  are  being  given  to 
French  groups  for  management.  In  line  with  this  we 
are  considering  a  plan  for  the  formation  of  corpora- 
tions whose  capital  will  be  half  French  and  half  Amer- 
ican and  which  will  exploit  the  potash  beds  in  the 
Thann  district."  Nothing  else  that  the  minister  said 
was  quite  so  significant  as  this  last  remark.  The  de- 
velopment of  the  potash  beds  will  be  a  vital  blow  at 
the  one-time  Germanic  commercial  authority  which 
for  years  had  one  expression  in  the  potash  trust  in 
which  the  Kaiser  himself  was  principal  partner.  The 
whole  trend  of  M.  Clementel's  talk  was  toward  close 
economic  cooperation  between  France  and  the  United 
States. 

So  much  for  the  official  point  of  view.  Let  us  now 
see  what  France's  foremost  Captain  of  Industry  thinks 
of  this  all-important  unity.  I  put  the  same  questions 
to  Andre  Citroen  that  I  addressed  to  the  Minister  of 
Commerce.  No  business  man  in  France  is  better 
equipped — few  are  so  well  qualified — to  speak  of  this 


86  PEACE  AND  BUSINESS 

situation  as  Citroen.  His  career  is  a  romance  of  self- 
made  success  worthy  to  rank  with  the  best  American 
examples.  This  Live  Wire  of  France  who  is  more 
American  in  temperament,  resource  and  performance 
than  any  of  his  colleagues  and  who  rose  from  humble 
manufacturer  of  gears  to  be  the  foremost  Shell  Master 
of  his  country,  was  producing,  when  I  saw  him  in 
October,  1918,  practically  half  of  the  whole  big  shell 
output  of  the  country.  He  had  not  only  enlarged  his 
already  colossal  plant  in  Paris  but  had  built  and  de- 
veloped the  great  national  munitions  plant  at  Roanne, 
where  among  other  things  he  constructed  a  model  city 
for  his  thirty  thousand  employes. 

"I  believe,"  said  M.  Citroen,  "that  just  as  the  Amer- 
ican Army  helped  so  nobly  to  save  France  during  the 
war  so  can  her  army  of  engineers  and  other  technical 
experts  aid  in  the  reconstruction  of  my  country.  I 
should  personally  welcome  the  acquisition  of  American 
engineers  in  my  factory.  I  know  and  admire  American 
industrial  enterprise  to  such  an  extent  that  I  am  sure 
they  would  be  an  inspiration  as  well  as  a  speeder-up  to 
my  own  employees.  Just  as  soon  as  possible  I  pro- 
pose to  send  a  delegation  of  my  engineers  to  study  the 
methods  in  the  American  industrial  establishments. 
Thus  America  and  France  could  have  an  exchange  of 
industrial  experts  in  the  same  way  that  American  and 
French  colleges  have  had  and  will  continue  to  have  an 
exchange  of  professors." 

M.  Citroen  merely  expressed  the  point  of  view  of 
many  outstanding  industrial  chieftains  when  he  made 
the  following  statement : 


FRANCE  AND  THE  FUTURE     87 

"No  one  can  doubt  that  the  American  Army  will  not 
only  leave  the  impression  of  its  great  heroism  and  char- 
acter but  it  will  also  stimulate  French  industry  and 
enterprise  to  a  tremendous  extent.  Take  our  railway 
transportation  system,  which  was  fairly  competent  be- 
fore the  war.  The  way  the  American  Army  Trans- 
portation Department  galvanized  traffic  is  not  only  a 
source  of  wonder  to  the  average  Frenchman  but  you 
may  be  sure  that  when  reconstruction  is  finally  in  force 
he  will  follow  the  American  example.  I  believe  that 
in  Paris  or  in  Bordeaux  we  should  construct  a  real 
American  railway  terminal  something  like  the  Grand 
Central  and  Pennsylvania  Stations  in  New  York  City, 
which  I  regard  as  among  the  highest  expressions  of 
American  constructive  genius.  They  represent  the  last 
word  in  public  comfort  and  convenience.  France  has 
never  had  any  stations  like  these  and  our  voyageurs 
who  have  been  compelled  to  wait  for  trains  in  the 
large  cities  have  really  suffered  great  hardships.  If 
such  a  model  station  were  built  it  would  not  only  open 
the  eyes  of  France  but  it  would  lead  to  a  whole  new 
era  of  public  improvements  that  could  only  contribute 
to  the  general  comfort.  When  people  are  comfortable 
they  are  happy  and  therefore  more  efficient." 

Citroen,  let  me  add,  was  the  French  pioneer  in  fac- 
tory welfare.  He  established  a  complete  dental  lab- 
oratory in  his  Paris  plant  and  made  the  periodical 
examination  of  the  teeth  of  his  twelve  thousand  em- 
ployees obligatory.  His  latest  welfare  innovation  is 
the  establishment  of  a  baby  hospital  for  the  children 
of  his  employees,  and  a  canteen  where  they  can  pur- 


88  PEACE  AND  BUSINESS 

chase  anything  from  the  proverbial  paper  of  pins  to  a 
kitchen  stove. 

Citroen's  after-the-war  projects  indicate  the  inevi- 
table trend  of  European  industrial  events.  I  asked 
him  what  he  would  do  with  his  vast  shell  factories 
when  the  guns  no  longer  bark. 

"That's  all  settled,"  replied  this  French  combination 
of  Schwab,  Gary  and  a  few  other  American  dynamos 
of  action.  "I  have  already  begun  to  make  popular- 
priced  automobiles,  with  the  same  speed  of  output 
that  I  have  made  shells.  The  commercial  utility  of  the 
automobile  was  demonstrated  long  before  the  war. 
The  war  itself  proved  that  without  motor  transport 
it  would  never  have  assumed  its  tremendous  propor- 
tions. Henceforth,  the  motor,  whether  in  France,  Eng- 
land, North  or  South  America  must  be  a  tremendous 
factor  both  in  business  Hfe  and  in  agriculture.  It  will 
be  one  of  my  aims  to  popularize  the  motor  among  the 
small  business  men  of  France  and  among  the  farmers. 
With  peace  one  Frenchman  will  have  to  do  the  work 
of  two  or  three,  and  the  automobile  will  help  him  to 
do  it." 

"If  you  produce  automobiles  on  the  same  relative 
scale  of  quantity  output  that  you  produce  shells  France 
will  not  be  able  to  absorb  the  output,"  I  remarked. 

Quick  as  a  flash  came  the  reply:  "If  France  cannot 
absorb  all  these  motor  cars  we  will  make  a  market  for 
them  in  South  America  and  in  South  Africa.  Indeed, 
with  half  a  chance  I  would  be  perfectly  willing  to 
enter  into  competition  with  America  in  low-priced  cars 
in  America." 


FRANCE  AND  THE  FUTURE     89 


In  this  last  sentence  you  get  a  hint  of  what  is  back 
of  the  minds  of  the  far-seeing  French  manufacturers, 
whose  views  are  practically  the  same  as  their  British 
coworkers.  It  all  means  that  when  America  begins  to 
lubricate  her  machine  for  the  after-the-war  commercial 
struggle  she  will  have  to  reckon  with  the  enterprise 
and  the  resource  of  new  trade  rivals. 


90  PEACE  AND  BUSINESS 


III 


There  is  not  the  slightest  doubt  that  American  war 
construction  in  France  will  help  considerably  to  change 
the  economic  map  of  Europe.  Look  into  world-trade 
reconstruction  and  you  see  that  adequate  dock  facilities 
plus  accessible  overland  transport  are  the  keys  to  the 
victories  of  peace.  Up  to  the  great  war  the  port  and 
dock  facilities  of  France  were  hopelessly  inadequate. 
Even  in  so  important  a  city  as  Bordeaux  there  were 
less  than  half  a  dozen  huge  cranes^ to  lift  machinery 
from  ship  to  railway  car.  A  large  American  machin- 
ery firm  in  Paris  had  to  move  its  heavy  crates  from 
ship  board  to  freight  car  by  hand  power.  The  boxes 
were  shoved  along  greased  gangways.  It  took  twenty 
men  a  whole  day  to  load  a  single  car.  A  self-pro- 
pelled crane  would  have  done  it  in  an  hour. 

The  American  war  effort  has  changed  all  this.  We 
not  only  developed  the  ports  but  installed  acres  and 
acres  of  electric  machinery  ranging  from  one  to  thirty- 
ton  cranes.  We  revolutionized  the  whole  process  of 
seaport  operation.  Let  me  illustrate  with  the  concrete 
case  of  St.  Nazaire,  that  famous  little  town  where  the 
first  American  Expeditionary  Force  landed  and  where 
the  Stars  and  Stripes  were  first  broken  out  over  the 
soil  of  freedom.  When  our  troops  landed  in  June, 
1917,  only  six  ships  of  ten  thousand  tons  each  could  be 
discharged  in  the  two  large  lock  basins  there.  To-day 
sixteen  vessels  of  larger  tonnage  can  unload  at  the  same 


FRANCE  AND  THE  FUTURE     91 

time,  thanks  to  the  American  construction,  while  near 
by  we  have  built  a  pier  that  will  accommodate  sixteen 
more  ships. 

Despite  this  expansion  only  the  surface  has  been 
scraped.  St.  Nazaire  can  be  developed  into  a  rival  of 
Bremen.  I  say  this  not  because  of  the  dock  possibili- 
ties but  because  St.  Nazaire  is  at  the  mouth  of  the 
Loire  River.  Forty  miles  upstream  is  the  ancient  busy 
city  of  Nantes.  Both  sides  of  the  river,  which  is  nav- 
igable for  sea-going  ships,  offer  rare  opportunities  for 
an  industrial  development  that  could  make  this  section 
of  France  a  new  world-productive  center. 

The  one  sure  way  for  the  United  States  to  compete 
in  finished  products  with  Europe  successfully  after  the 
war  is  to  build  branch  factories  in  France  and  else- 
where, utilizing  French  labor  and  getting  thereby  the 
incalculable  goodwill  and  low  cost  of  output  that  at- 
tach to  such  a  performance.  If  we  are  to  set  up  this 
new  overseas  industrial  empire  I  know  of  no  better 
location  for  our  factories  than  along  the  banks  of  this 
great  river  whose  mouth  has  already  known  the  gal- 
vanizing effect  of  American  endeavor  and  where  the 
very  name  of  the  United  States  is  one  to  conjure  with. 
It  is  half  the  trade  battle. 

Such  an  American-developed  ocean  gateway  could 
have  an  enormous  influence  in  checkmating  Germany's 
after-the-war  economic  plans.  For  one  thing  it  could 
be  made  into  a  port  of  entry  for  the  economic  conquest 
of  the  Mittel  Europa  which  was  one  of  the  German 
trade  dreams.  The  freight  journey  from  St.  Nazaire 
to  Paris  is  an  easier  one  than  the  journey  from  Havre 


92  PEACE  AND  BUSINESS 

to  Paris  because  it  is  more  down  grade.  I  use  this 
comparison  because  before  the  war  American  firms 
shipped  goods  from  the  United  States  for  Switzerland 
by  way  of  Havre.  The  development  of  St,  Nazaire 
would  not  only  shorten  this  haul  to  a  certain  extent  but 
give  us  a  new  and  direct  route  into  all  the  Central 
European  states,  where  Germany  will  undoubtedly  be- 
gin her  outside  commercial  rehabilitation. 

What  is  true  of  St.  Nazaire  is  equally  true  of  Bor- 
deaux, which  could  be  the  port  of  entry  and  likewise 
a  center  of  distribution  for  our  inevitable  trade  with 
Italy,  which  country  expects  to  have  a  considerable 
business  intercourse  with  us  henceforth.  In  Bordeaux, 
through  a  joint  Franco-American  operation,  lies  the 
opportunity  to  put  a  big  dent  into  Hamburg.  One 
reason  why  this  German  city  attained  such  world-wide 
importance  was  because  it  was  a  free  port.  This  means 
that  any  shipper  could  store  immense  quantities  of  his 
goods  in  the  vast  warehouses  there  and  reship  them  at 
will  to  any  point  in  Europe.  These  goods  were  ad- 
mitted free  of  duty  into  the  warehouses.  They  came 
under  customs  control  only  when  they  were  reshipped 
into  Germany.  The  man  who  wanted  to  ship  his  wares 
into  Russia  could  do  so  without  paying  a  mark  of 
German  customs.  What  was  the  result?  It  made 
Hamburg  an  international  port,  and  in  addition  it  gave 
German  railways,  German  labor  and  German  banks  an 
immense  amount  of  profitable  business.  Bordeaux  or 
St.  Nazaire  could  do  likewise,  and  with  the  benefits 
of  American  war  construction  have  a  whole  rebirth  of 
authority  and  prosperity.     In  aiding  France  to  over- 


FRANCE  AND  THE  FUTURE     93 


come  the  military  aggression  of  Germany  we  have  like- 
wise aided  her — and  ourselves — to  combat  the  inevi- 
table trade  aggression  that  will  come  with  peace. 

No  American  war  aid  easily  convertible  into  an  in- 
dustrial asset  for  peace  is  more  significant  than  the 
development  of  French  hydro-electric  power  by  our 
army  engineers.  The  immense  A.E.F.  locomotive  and 
car  repair  shops,  salvage  depots,  laundries — all  the  vast 
machinery  that  we  set  in  motion  to  feed  and  supply  our 
troops — had  to  be  driven.  With  a  scarcity  of  fuel  we 
were  compelled  to  inaugurate  what  amounted  to  a  cam- 
paign of  education  in  water  power  which  will  not  only 
revolutionize  parts  of  France  but  be  a  tremendous 
weapon  against  the  German. 

To  get  the  full  meaning  of  this  procedure  you  must 
know  that  among  other  things  the  great  war  was  a  war 
of  coal.  I  once  heard  Lloyd  George  say:  "Coal  is 
life."  He  knew,  just  as  every  other  person  who 
touched  the  war  knew,  that  fuel  has  been  as  precious 
as  powder,  and  sometimes  more  so.  The  nation  that 
can  supply  coal  henceforth  will  have  a  tremendous 
bargaining  asset. 

Germany  cunningly  capitalized  this  European  need 
of  coal.  It  has  been  the  club  that  she  held  menacingly 
over  the  head  of  the  unhappy  neutral  dependent  upon 
her  for  supplies.  Holland  presented  one  of  the  most 
conspicuous  examples  of  this  economic  intimidation. 
The  little  diked  kingdom  obtained  the  greater  part  of 
her  coal  from  the  Rhine  provinces.  When  the  Allies 
seized  the  Dutch  ships  Germany  cut  off  the  Dutch  coal 
supply  and  Dutch  industry  became  impotent. 


94  PEACE  AND  BUSINESS 

So  too  with  Italy  before  the  war.  There  the  Ger- 
man scheme  was  even  more  astute.  Germany  built  up 
and  developed  a  great  water-power  system  in  Italy, 
first  because  it  created  a  big  market  for  German  electric 
machinery  and  proved  profitable  for  German  capital 
generally ;  second,  because  the  more  dependent  Italy  be- 
came upon  water  power  the  more  independent  she  also 
became  of  British  coal.  Water-power  development 
played  the  German  game  both  ways.  The  Swiss  eco- 
nomic vassalage  to  Germany  is  likewise  due  to  coal. 

If  through  a  great  water-power  development  France 
can  make  herself  absolutely  independent  of  German 
fuel  she  will  go  a  long  way  toward  a  complete  freedom 
of  industrial  action.  Strange  as  it  may  seem  despite 
her  immense  available  water  power  France  has  been 
conspicuously  backward  in  hydro-electrics.  One  reason 
has  been  that  the  French  engineer  is  a  conservative 
person.  This  caution  has  extended  to  the  genie — the 
army  engineers — whose  fogyism  was  the  bane  of 
Napoleon's  life.  It  is  a  tradition  in  the  French  Army 
that  Napoleon  regularly  discharged  the  chiefs  of  his 
engineering  staffs  every  two  weeks.  Like  the  cat  they 
always  came  back. 

The  army  engineers  who  fought  against  the  Germans 
these  last  few  years,  however,  have  caught  the  spirit 
of  what  intensive  water-power  development  means. 
Their  brilliant  imaginations  have  seen  its  possibilities, 
and  the  net  result  is  that  the  area  of  electric-power  sup- 
ply that  the  A.E.F.  developed  for  its  use  in  middle 
France  will  undoubtedly  be  widened  so  as  to  serve  a 
large  part  of  the  country. 


FRANCE  AND  THE  FUTURE     95 


It  is  estimated  that  the  available  water  power — 
minimum  flow — in  France  is  4,600,000  horse  power. 
The  average  flow  is  9,200,000  horse  power.  This 
is  greater  than  the  maximum  potential  water 
power  of  Italy.  France  has  only  developed  1,456,000 
horse  power,  or  less  than  one-sixth  of  her  white-coal 
asset.  Most  of  the  potential  French  water  power  is  in 
the  Alps  and  the  Pyrenees,  which  means  that  the  power 
would  have  to  be  transmitted  over  a  considerable  dis- 
tance. To  the  French,  who  have  hitherto  not  seen 
industry  in  especially  large  terms,  the  harnessing  up  of 
this  power  has  seemed  an  impossible  task. 

Here  is  where  the  American  opportunity  comes  in. 
In  the  United  States  it  is  no  uncommon  feat  to  transmit 
electric  power  hundreds  of  miles  across  mountains  to 
serve  territories  as  big  as  Switzerland.  American  ex- 
perience proves  beyond  a  doubt  that  it  is  practical  to 
develop  all  the  water  power  on  a  range  of  mountains 
in  France  and  distribute  it  through  half  a  dozen  prov- 
inces. The  operation  simply  needs  American  capital 
and  American  engineers.  The  spade  work  for  this 
proposition  has  already  been  done,  because  the  French, 
to  use  the  phraseology  of  business,  are  "sold"  on  the 
practicability  of  water  power.  The  A.E.F.  has  pointed 
the  way ;  it  is  now  up  to  Yankee  financial  enterprise  to 
get  busy  and  do  the  rest.  France  would  welcome  the 
aid,  which  would  be  good  business  for  us  at  the  same 
time. 

All  this  American  construction  backed  up  and  stimu- 
lated by  the  example  of  our  own  strenuous  methods 
will  not  avail  for  complete  rehabilitation  if  the  French 


96  PEACE  AND  BUSINESS 

themselves  do  not  get  busy.  On  this  point  there  is  no 
argument.  France  came  back  Hke  a  whirlwind  after 
the  great  defeat  of  1870-71,  and  then  she  stood  alone. 
How  much  easier,  then,  will  be  her  reconstruction  after 
a  war  in  which  she  is  not  only  victorious  but  stands  out 
as  the  heroine  among  the  nations  ?  What,  then,  are  the 
native  tools  with  which  she  will  reconstruct  ? 

We  will  begin  with  man  power.  The  greatest  asset 
of  any  people  is  its  trained  and  productive  population. 
With  France  this  leads  to  the  grim  side  of  the  picture, 
because  she  has  lost  1,500,000  men  killed  and  more 
than  500,000  disabled  permanently.  Thus  nearly  a 
third  of  the  really  vital  man  power  of  the  nation  is 
permanently  out  of  commission.  What  will  take  its 
place  ? 

First  of  all  an  equal  number  of  women  have  been 
trained  for  both  the  industry  of  war  and  that  of  peace. 
A  lathe  remains  a  lathe  and  the  woman  who  can  oper- 
ate one  for  the  production  of  shells  can  also  operate 
one  for  automobile  parts  or  tools.  These  French- 
women, whose  middle  name  is  work,  like  their  British 
sisters  in  industry,  will  not  give  up  their  job;  nor  will 
France  want  them  to  go  back  to  household  work  with 
peace.  These  women  will  provide  the  backbone  of  the 
new  French  industrial  offensive. 

In  the  second  place,  thanks  to  men  of  enterprise  like 
Andre  Citroen,  the  whole  mechanical  map  of  France 
has  been  changed.  The  labor-saving  device,  which  was 
more  or  less  tabooed  before  the  war  because  it  inter- 
fered with  the  serene  routine  of  French  labor,  has  been 
part  and  parcel  of  the  war  productive  machine.     It 


FRANCE  AND  THE  FUTURE     97 


will  remain  so.  In  these  labor-saving  devices  lies  one 
big  opening  for  American  machinery,  more  especially 
automatics,  for  as  far  as  shell  production  is  concerned 
it  has  been  a  war  of  machinery. 

Heretofore  France  has  leaned  heavily  upon  the  Ger- 
man salesmen.  It  is  no  exaggeration  to  say  that  the 
bulk  of  French  wine  sold  both  in  Germany  and  in  Rus- 
sia before  the  war  was  sold  by  German  salesmen.  For 
a  number  of  years  to  come,  however,  the  German  trav- 
eling man  will  not  disfigure  the  French  landscape  to 
any  alarming  extent.  France  is  training  a  new  school 
of  salesmen  who  will  succeed  so  far  as  possible  the 
German  exploiters.  For  this  she  will  utilize  her  partly 
disabled  men,  who  will  not  only  be  able  to  serve  their 
country  but  will  also  provide  a  profitable  means  of 
livehhood  at  the  same  time. 

Just  as  the  war  was  epoch-making  in  its  scope  and 
result,  so  will  its  economic  aftermath  be  equally  revo- 
lutionary. No  phase  of  it  will  be  more  remarkable 
than  that  which  afifects  the  holding  of  land  in  France. 
Under  the  code  all  French  land  is  equally  divided 
among  the  heirs  upon  the  death  of  the  owners.  This 
is  the  reason  why  France  is  a  nation  of  small  farms. 
It  was  a  source  of  wonder  to  the  American  agricul- 
turalists who  came  to  France  with  the  A.E.F.  to  find 
the  miracles  that  the  French  peasant  could  do  with  the 
section  of  soil  that  would  be  little  more  than  a  back 
yard  in  America.  It  has  meant  intensive  farming  of 
the  highest  sort,  which  has  been  carried  on  for  years 
with  the  most  primitive  implements,  mostly  by  hand 
power. 


98  PEACE  AND  BUSINESS 

Two  things  will  probably  change  this  antiquated 
condition:  One  is  a  revision  of  these  land  laws  so  as 
to  enable  larger  holdings ;  the  other  is  the  introduction 
of  improved  farming  machinery.  The  farm  tractor  is 
inevitable  in  France.  Several  of  the  great  French  shell 
manufacturers  have  already  arranged  to  produce  them. 
In  addition  the  whole  new  and  altered  attitude  toward 
agriculture  will  mean  that  American  farm  machinery 
should  have  as  great  an  opportunity  here  as  it  had  in 
Russia  before  the  war. 

France  will  not  lack  the  wherewithal  to  resume  her 
industrial  life.  Though  the  Hun  stripped  the  occupied 
communities  of  their  machinery  the  larger  fact  is  that 
there  will  be  restitution  for  all  this.  Essen  must  renew 
Lille,  Hamburg  restore  Douai,  Munich  repay  Cambrai 
and  Mannheim  rebuild  St.  Ouentin. 

When  the  Hun  ravaged  these  industrial  centers  he 
had  other  things  in  mind  besides  making  French  indus- 
try impotent  and  impressing  his  ruthlessness.  It  was 
German  commercial  propaganda  executed  with  an  ax 
instead  of  the  usual  smug  and  hypocritical  smile  and 
speech.  He  killed  two  birds  with  one  stone.  By 
stripping  French  factories  and  even  smashing  the  em- 
broidery frames  in  the  homes  of  innocent  civilians  he 
knew  that  there  would  be  restitution.  He  said  to  him- 
self :  "If  we  have  to  restore  all  this  machinery  we  will 
use  the  German  article,  which  will  not  only  create  a 
market  for  our  commodities  but  create  a  continuous 
demand  for  new  parts." 


FRANCE  AND  THE  FUTURE     99 


IV, 

Do  not  get  the  idea  that  because  France  has  been 
content  to  do  her  industrial  job  in  her  own  pecuHar 
way  all  these  years  she  is  not  entirely  up  to  date  in 
many  respects.  For  many  years  America  has  thought 
that  she  had  exclusive  rights  to  the  trust  idea.  Exam- 
ine into  some  of  the  syndicates  in  France  and  you 
find  out  that  we  have  labored  under  a  great  delusion. 
The  cofifee  business  of  France,  for  example,  is  as  com- 
pletely monopolized  as  was  the  petroleum  industry  in 
that  day  of  undisputed  Standard  Oil  sway.  For  years 
practically  all  the  cofifee  sold  in  France  has  been 
roasted,  ground  and  distributed  by  a  small  group  of 
men  who  made  the  middleman  and  through  him  the 
consumer  accept  the  article  they  saw  fit  to  produce, 
and  pay  the  price  they  dictated. 

The  same  thing  is  true  of  the  chocolate  trust,  which 
is  even  more  closely  controlled  and  which  is  domi- 
nated by  M.  Menier  who  exercises  prerogatives  no 
less  despotic  than  those  once  regarded  as  the  divine 
right  of  John  D.  Rockefeller.  Likewise  it  may  be 
well  to  speak  of  the  bakery  trust,  which  has  an  equal 
grip  on  the  ovens  of  France.  In  these  three  close- 
knit  syndicates  you  find  one  expression  of  French 
business  coordination  which,  when  linked  against  Ger- 
man, and  for  that  matter  any  other  competition,  is 
bound  to  be  a  great  asset  after  the  war.  So  much  for 
the  old-line  trust  as  we  know  it  in  America,  which 


loo  PEACE  AND  BUSINESS 

was  a  monoply  in  the  interest  of  a  private  business. 

France,  however,  has  another  and  in  many  respects 
a  much  more  dangerous  kind  of  trust  in  the  shape  of 
what  is  known  as  a  consortium,  or  a  comptoir  d'achat, 
as  it  is  called  in  French.  A  consortium  is  a  syndicate 
of  French  interests  under  government  control. 
It  is  a  product  of  the  war  and  was  conceived  to  control 
the  importation  of  manufactured  goods  into  France 
and  to  encourage  manufacture  at  home.  These  con- 
sortiums extend  now  to  a  dozen  branches  of  industry 
and  constitute  such  a  serious  menace  to  American 
business  interests  after  the  war  that  the  whole  idea 
is  well  worth  explaining  in  plain  unsentimental  terms. 

The  most  illuminating  example  of  the  consortium  is 
in  machine  tools.  Prior  to  its  organization  the  Amer- 
ican machine-tool  importer  in  France  could  order  his 
goods  direct  from  New  York,  Boston,  Philadelphia, 
Bridgeport  or  wherever  his  manufacturer  happened  to 
be  located.  The  order  of  the  French  purchaser  passed 
through  his  hands  only.  The  consortium,  however, 
dictates  that  every  order  for  machine  tools  placed  in 
the  United  States  must  have  its  vise  and  be  negotiated 
through  its  officials. 

Here  is  where  the  rub  comes  in:  The  French  Ma- 
chine Tool  Consortium  is  composed  of  French  ma- 
chine-tool builders  and  importers.  They  have  the 
power  to  pass  on  every  order  for  American  tools. 
More  than  this,  they  conduct  the  whole  fiscal  trans- 
action. In  other  words  the  machine-tool  business  of 
every  American  in  France  is  placed  absolutely  at  the 
mercy  of  his  rivals,  who  form  what  is  nothing  less 


FRANCE  AND  THE  FUTURE     lor 

than  a  miniature  industrial  autocracy  and  whose  slo- 
gan is  "France  for  the  French."  It  is  with  this  spirit 
that  our  after-the-war  trade  must  reckon  in  many- 
lines. 

The  whole  effect  of  the  machine-tool  consortium 
upon  the  American  agent  in  France  was  admirably 
summed  up  by  a  well-known  New  York  business  man 
in  France  who  when  asked  to  make  a  statement  as 
to  how  he  was  affected  by  this  organization  said : 

"We  have  been  informed  that  if  we  wish  to  place 
any  order  in  future  with  American  firms  for  whom 
we  are  exclusive  agents  in  this  country  we  shall  have 
to  proceed  as  follows :  First :  Obtain  an  order  from 
our  customer  made  out  in  the  name  of  the  consortium, 
mentioning  the  name  of  the  manufacturer  and  the 
tools  he  wishes  to  purchase.  Half  of  the  purchase 
money  must  be  paid  to  the  consortium.  Second  :  The 
consortium,  if  it  thinks  advisable,  transmits  this  order 
to  the  French  High  Commission  in  the  United  States. 
They  may  decide,  however,  to  inform  our  client  in 
France  that  he  cannot  have  the  tools  he  desires  but 
that  he  can  have  other  similar  tools  which  can  be 
purchased  from  a  member  of  the  consortium.  Third : 
If  the  consortium  permits  us  to  fill  the  order  that  we 
have  obtained  it  exacts  a  generous  fee  but  leaves  all 
the  work  of  clearing  and  shipping  the  goods  on  arrival 
in  France  to  us.  In  addition  we  are  required  to  col- 
lect our  commission  from  the  American  manufac- 
turers ourselves. 

"This  system  in  a  word  practically  excludes  from 
business  any  American  firm  in  France  whose  sole  rea- 


I02  PEACE  AND  BUSINESS 

son  for  existence  is  to  act  as  intermediary  between 
American  manufacturers  and  French  buyers.  In  the 
long  run  it  also  means  that  any  American  manufac- 
turer who  has  a  representative  in  France  other  than 
one  of  the  three  French  machine-tool  importers  who 
are  members  of  the  consortium  will  be  excluded  from 
doing  business." 

What  is  happening  with  machine  tools  is  also  hap- 
pening with  agricultural  machinery,  cotton  goods,  dye- 
stuffs  and  steel.  It  means  that  the  French  importers 
and  manufacturers  are  setting  up  a  machine  for  self- 
protection  that  is  bound  to  be  a  serious  obstacle  to  our 
future  overseas-trade  ambitions.  It  is  a  matter  for 
rigid  investigation  and  action  by  the  Department  of 
Commerce  at  Washington.  If  we  are  to  have  a  great 
world  trade  our  business  must  be  backed  up  and  pro- 
tected by  the  Government.  One  reason  why  Germany 
piled  up  her  one-time  universal  commercial  authority 
was  because  the  Foreign  Office  in  Berlin  was  not 
only  a  partner  in  every  enterprise  but  fought  the 
Teutonic  business  battles  everywhere. 

The  path  of  the  consortium  is  all  right  during  war, 
when  control  is  the  regular  thing.  The  average  busi- 
ness man  anywhere  will  put  up  with  all  sorts  of 
restrictions  to  help  win  the  war.  It  is  not  in  the 
nature  of  the  French  business  man,  however,  to  submit 
quietly  to  drastic  government  regulation  when  grave 
necessity  is  not  the  paramount  issue  and  when  his 
pocketbook  is  affected.  The  French  manufacturer 
who  will  need  tools  in  the  future  will  want  to  buy 
them  wherever  he  can  lay  hands  on  them. 


FRANCE  AND  THE  FUTURE     103 

I  have  explained  the  work  of  the  consortium,  first 
to  shed  a  new  Hght  on  certain  French  business  meth- 
ods, and  second  to  show  that  in  the  midst  of  the 
comradeship  of  the  firing  line  where  French  and 
American  fought  shoulder  to  shoulder  against  the 
common  enemy  the  thrifty  French  business  man  estab- 
lished a  bloodless  fighting  front  on  which  the  two 
Allies  were  on  opposite  sides. 

One  point  in  connection  with  the  consortium  should 
not  be  overlooked  by  American  manufacturers.  Every 
French  group  of  this  sort  that  has  done  business  with 
Great  Britain  has  had  a  much  more  satisfactory  re- 
lationship than  in  a  corresponding  transaction  with  the 
United  States.  One  reason,  as  I  have  frequently 
pointed  out,  is  that  British  manufacturers  mark  their 
shipments  so  legibly  and  permanently  that  they  can  be 
easily  identified  when  they  arrive  in  France.  For 
years  our  exporters  with  few  exceptions  have  had  a 
slap-dash  way  of  marking  boxes  and  bales  for  foreign 
countries  and  using  flimsy  paper  tags  when  they  should 
be  using  linen  ones.  Before  the  war  half  the  Ameri- 
can goods  that  got  lost  at  French  ports  went  astray 
simply  because  of  bad  marking.  Though  this  seems 
a  comparatively  small  matter  it  spells  success  or  fail- 
ure in  dealing  with  foreign  countries,  and  especially 
with  foreign  governments. 

Here  is  a  little  story  that  will  emphasize  the  price 
that  we  have  paid  in  the  past  for  this  carelessness. 
The  Paris  representative  of  a  large  American  ma- 
chinery distributing  concern  in  New  York  concluded 
a  sale  with  a  French  manufacturer  at  Lyons  involving 


I04  PEACE  AND  BUSINESS 

300,000  francs.  The  machinery  was  shipped  in  sec- 
tions. What  was  supposed  to  be  the  complete  outfit 
was  delivered  to  the  purchaser  at  his  plant.  When 
he  set  up  the  machines  he  discovered  that  a  vitally 
necessary  part  for  each  one  was  missing.  Quite  rightly 
he  refused  to  pay  for  the  goods  until  they  arrived. 

The  American  agent  in  Paris  personally  went  to 
Bordeaux  to  trace  the  missing  parts.  After  a  four 
days'  hunt  he  located  them  in  a  box  which  had  been 
marked  in  lead  pencil.  The  rain  had  obliterated  these 
marks,  and  the  package  reposed  in  an  obscure  comer 
and  except  for  the  agent's  enterprise  and  determina- 
tion would  never  have  been  found. 

The  institution  of  government  control  of  industry  is 
likely  to  continue  in  Europe  long  after  peace.  Gov- 
ernmental supervision  has  become  the  national  habit 
and  it  will  probably  be  as  constructive  in  building  up 
industry  as  it  was  in  overthrowing  the  enemy.  Thanks 
to  the  war  various  controls  and  especially  those  in  raw 
materials  will  be  first  and  distinct  aids  to  economic 
reconstruction. 

One  of  the  many  French  war  compensations  of  this 
kind  is  the  development  of  the  Inspection  des  Forges. 
This  literal  control  of  the  forges  of  France,  which 
began  on  a  large  scale  as  a  pure  war  measure,  will  be 
one  of  the  French  bulwarks  against  the  German  ma- 
chinery trusts  after  the  war.  Through  it  every  ma- 
chine shop  in  France  has  practically  become  federated 
under  government  supervision.  This  means  that  the 
French  know  down  to  the  last  ton  of  output  just  what 
every  French  shop  can  produce.     In  the  present  great 


FRANCE  AND  THE  FUTURE     105 


era  of  rehabilitation  France  will  have  her  eye  on  every 
lathe  and  expects  it  to  do  its  duty. 

If  the  Inspection  des  Forges  can  be  capitalized — as 
it  undoubtedly  will — it  means  the  establishment  of  an 
agency  that  can  readily  do  trade  battle  with  the  Allge- 
meine  Electrische  Gesellschaft — the  "A.E.G." — Ger- 
many's electric  machinery  octopus  which  owned  in- 
dustrial Italy,  dominated  Belgium,  had  immense  in- 
terests in  Spain,  Russia,  Scandinavia  and  South 
America,  and  was  reaching  out  to  England  when  the 
war  stopped  its  monopolistic  game. 

The  operation  of  the  Inspection  des  Forges  has 
developed  an  industrial  asset  not  to  be  despised.  It 
lies  in  the  mobilization  of  the  small  manufacturer,  who 
like  the  small  investor  is  one  of  the  principal  safe- 
guards of  any  nation.  At  the  Inspection  des  Forges 
is  a  card  index  of  every  establishment  in  France 
equipped  with  machinery.  It  ranges  from  the  vast 
Paris  establishments  like  Andre  Citroen  down  to  a 
little  room  on  a  side  street  in  Lyons  where  an  aged 
machinist  works  with  a  hammer.  More  than  once 
during  the  war  some  obscure  man — they  are  all  spe- 
cialists of  some  kind — has  been  able  to  produce  a  very 
delicate  and  equally  essential  metal  part  that  saved  the 
industrial  day.  These  men  will  help  to  recoup  the 
nation's  losses  and  to  give  her  a  new  and  permanent 
efficiency. 

The  hasty  American  must  not  run  away  with  the 
idea  that  because  we  have  built  docks,  installed  cold- 
storage  plants,  laid  down  railways,  and  galvanized 
French  creative  effort  generally  that  all  the  obligation 


io6  PEACE  AND  BUSINESS 

for  this  war  activity  rests  with  France.  When  you 
look  at  both  sides  of  this  matter  you  find  that  it  is 
almost  a  fifty-fifty  proposition.  Just  as  France  has 
learned  many  new  tricks  from  us,  so  have  we  gained 
much  out  of  the  historic  contact  with  her.  In  this 
matter  history  is  merely  repeating  itself.  The  old 
civilizations  invariably  affected  the  new.  The  Cru- 
saders, for  example,  taught  the  Saracens  little;  Spain 
learned  from  the  Moors. 

Thus  while  the  American  will  leave  his  impress  in 
France  in  the  shape  of  a  revitalized  telephone  system, 
many  more  bathtubs,  enlarged  power  production  and 
a  speeded-up  railway  system  he  will  take  back  home 
with  him  a  greater  skill  in  road  making,  a  more  scien- 
tific knowledge  of  forestry,  and  an  appreciation  of  the 
art  of  living  such  as  he  has  never  had  before. 

In  the  midst  of  her  war  travail  France  gave  striking 
evidence  that  she  has  originality  and  enterprise.  I 
can  illustrate  what  I  mean  with  two  illuminating  inci- 
dents. In  August,  19 18,  the  fashionable  dressmakers 
in  Berlin  in  a  final  effort  to  show  that  Germany  was 
still  on  the  map,  held  what  purported  to  be  a  fashion 
show  in  Zurich.  Being  German  it  was  clumsy,  drab 
and  stolid. 

Just  as  soon  as  the  French  modistes  heard  of  this 
they  organized  a  real  French  exhibition,  transported 
it — gowns,  manikins  and  all — to  Zurich,  and  set  up 
such  a  fascinating  and  bewildering  array  of  chic  love- 
liness that  the  recollection  of  the  German  show  be- 
came a  nightmare.  In  the  plain  vernacular  this 
French  outfit  put  it  so  completely  over  the  German 


FRANCE  AND  THE  FUTURE     107 

aggregation  that  the  few  Swiss  who  had  had  the 
hardihood  to  order  their  frocks  immediately  changed 
their  minds. 

Far  more  expressive  of  French  national  hustle  and 
the  reborn  spirit  of  the  nation  is  the  way  the  fourth 
great  Government  Loan  was  sold  last  October.  In 
publicity  and  action  the  campaign  slightly  resembled 
our  Liberty  loan  crusades.  I  could  not  hit  upon  a 
more  fitting  revelation  of  how  the  French  learned  to 
capitalize  a  great  hour  with  spectacular  effect. 

The  first  three  French  Loans  were  nice  amiable 
affairs.  They  were  put  out  at  inopportune  times,  when 
national  depression  followed  reverses  at  the  Front. 
The  banks  merely  displayed  perfunctory  posters  and 
put  the  proposition  of  buying  up  to  patriotism,  not 
always  a  good  salesman  and  invariably  needing  some 
stimulation.  Fortunately  for  the  French  Treasury  the 
average  French  citizen  knows  the  value  and  stability 
of  his  government  and  needs  little  education  in  this 
kind  of  security  buying. 

Along  came  the  Fourth  Loan  and  with  it  the  Allied 
advance  that  smashed  the  German  Army.  The  whole 
country  was  athrill  with  the  great  news  of  the  inevi- 
table defeat  of  the  enemy.  So  the  loan  managers  said  : 
"We  will  launch  this  loan  on  the  high  tide  of  French 
success."  They  did  so  with  flags  flying,  bands  play- 
ing and  every  trapping  of  a  circus. 

The  way  they  handled  it  in  Paris  was  typical  of  the 
revived  nation.  First  of  all  four  or  five  hundred  cap- 
tured German  cannon  were  brought  down  from  the 
Front.     They  were  parked  in  the  great  Place  de  la 


io8  PEACE  AND  BUSINESS 

Concorde.  From  the  walls  of  the  Tuileries  Gardens 
scores  of  German  aeroplanes  looked  down  on  the  tro- 
phies while  in  the  gardens  themselves  were  the  rem- 
nants of  a  great  German  Zeppelin.  The  Champs- 
£lysees  was  lined  from  almost  end  to  end  with  German 
77's.  There  were  enough  painted  German  Iron 
Crosses  brooding  over  Paris  those  weeks  to  decorate 
a  whole  regiment.  Interspersing  this  martial  display 
were  huge  placards  urging  the  French  to  buy  govern- 
ment bonds.  The  issue  was  called  the  "Liberation 
Loan,"  and  every  Frenchman  who  bought  these  securi- 
ties felt  in  his  heart  tliat  it  was  more  than  a  phrase. 
And  it  was. 

In  the  midst  of  all  this  demonstration  Lille  was 
evacuated,  and  the  statue  of  this  gallant  city,  located 
in  the  very  heart  of  Paris,  became  a  shrine  that  served 
two  purposes :  One  was  to  offer  thanksgiving  for  de- 
liverance from  the  invader,  and  the  other  was  to  create 
an  inspired  counter  for  the  sale  of  national  bonds.  The 
Lille  statue  was  heaped  with  flowers  and  draped  with, 
flags,  yet  the  most  conspicuous  thing  was  a  huge  sign 
which  read :  "Subscriptions  for  government  bonds  re- 
ceived here."  A  still  further  evidence  of  French  cap- 
italization of  this  crowded  hour  was  the  arrival  of  a 
submarine  in  the  Seine,  which  also  became  a  highly 
emotional  center  of  bond  selling. 

Every  bank  in  Paris  unfurled  a  loan  poster  to  the 
breeze.  They  were  marvels  of  art  and  persuasive- 
ness. They  hit  the  popular  fancy  because  victory  was 
in  the  air  and  its  spirit  was  transferred  to  every  man's 
pocketbook.     I   can  give  you  no  better  idea  of  the 


FRANCE  AND  THE  FUTURE    109 

effectiveness  of  these  French  posters  than  to  tell  this 
incident:  In  the  dark  days  of  the  war  the  French  had 
an  expression :  "On  Ics  aura" ;  which  means,  "We'll 
get  them."  It  meant  the  boches  of  course.  One  of 
the  most  dramatic  of  these  Fourth  Loan  posters  rep- 
resented the  advancing  Allied  Armies  and  on  it  was 
printed  the  words :  ''On  Ics  a" ;  which  means,  "We've 
got  them."    No  wonder  the  loan  got  over  big. 

Any  analysis  of  the  new  France  must  reckon  with 
still  another  well-nigh  priceless  asset — the  return  of 
Alsace-Lorraine.  In  this  restoration  and  its  effect 
upon  the  future  of  the  nation  you  get  a  typically 
French  combination  of  the  practical  and  the  senti- 
mental. 

Nearly  half  a  century  ago  Germany  fastened  her 
greedy  grip  on  Alsace-Lorraine  and  in  flagrant  vio- 
lation of  the  rights  of  nations  dismembered  France 
of  two  of  her  fairest  provinces.  Few  who  watched 
regretfully  the  passing  into  alien  hands  of  Rhine 
Valley  with  its  genial  climate,  rich  cornfields,  luscious 
vintages  and  superb  Vosges  Forests  appreciated  the 
value  of  mineral  ore  lying  dormant  beneath  the  Lor- 
raine plateau  awaiting  only  the  energy  of  the  miner 
and  the  alchemy  of  the  metallurgist  to  convert  it  into 
gold  sufficient  to  ensure  the  prosperity  of  the  two 
provinces  for  many  future  decades. 

Germany  had  no  intention  of  letting  it  lie  dormant. 
She  wrested  the  ore  from  the  conquered  soil,  and 
out  of  it  built  the  superstructure  of  her  industry.  It 
formed  the  real  basis  of  her  amazing  expansion  which 
her    stupid    militarism    has    now    wrecked.      Oddly 


no  PEACE  AND  BUSINESS 

enough,  the  bulk  of  the  shot  and  shell  that  the  boche 
rained  down  so  mercilessly  upon  that  plundered  people 
came  from  their  own  earth. 

The  economic  importance  of  the  return  of  Alsace- 
Lorraine  to  France  is  enormous.  Iron  plays  the  most 
important  role  in  the  industrial  life  of  a  nation.  Thus 
the  restitution  of  Lorraine  gives  France  a  new  lease 
on  productivity  at  a  time  when  raw  material  will  be 
king.  The  statistics  tell  the  whole  story.  In  1871, 
364,000  tons  represented  the  production  of  the  an- 
nexed territory.  In  1885  it  had  risen  to  2,153,000 
tons,  with  a  still  further  increase  to  4,222,000  tons  in 
1895.  At  the  end  of  1905  the  Germans  had  extracted 
11,968,000  tons,  and  the  year  before  the  outbreak  of 
the  war  a  total  of  more  than  21,000,000  tons  had  been 
registered.  French  Lorraine — containing  the  famous 
Briey  and  Longwy  basins — produces  nearly  20,000,- 
000  tons.  These  two  regions  form,  with  the  excep- 
tion of  the  Lake  Superior  district,  the  richest  mining 
area  in  the  whole  world.  In  1913,  when  173,000,000 
tons  represented  the  world  supply  of  iron  ore,  more 
than  a  quarter  was  contributed  by  Lorraine  alone. 

That  Germany  Is  fully  alive  to  the  advantage  of 
the  Lorraine  iron  fields  is  demonstrated  by  a  secret 
petition  formulated  by  the  German  metallurgists  when 
Germany  was  at  the  height  of  her  triumph  and  her 
hordes  were  menacing  Paris.  This  petition  main- 
tained that  for  the  successful  conduct  of  future  wars 
it  was  absolutely  necessary  for  the  Lorraine  iron 
fields  to  be  incorporated  in  the  German  Empire,  and 
that  it  was  only  the  seizure  intact  of  the  Briey  and 


FRANCE  AND  THE  FUTURE    iir 


Longwy  basins  which  saved  the  German  Army  from 
capitulation  after  the  first  few  months  of  the  present 
war.  The  German  forge  masters  suggested  that 
France  would  be  willing  to  exchange  the  Briey  and 
Longwy  basins  for  the  industrial  and  mining  districts 
then  occupied  by  the  German  Army,  which  included 
Lille,  Valenciennes,  Maubeuge  and  Saint-Quentin. 
This  arrogance  never  came  to  a  show-down. 

Ever^-thing  is  changed.  France  regenerate — the 
new  France  bom  of  the  war — emerges  victorious. 
With  her  huge  factories  and  immense  munition  plants 
no  longer  attuned  to  the  Marsellaise  their  call  for 
material  for  reconstruction  will  be  answered  by  the 
richly  dowered  iron  fields  of  Alsace-Lorraine. 

Quite  apart  from  a  keen  appreciation  of  economic 
and  industrial  advantages  every  Frenchman  has  a 
sentimental  regard  for  Alsace-Lorraine  that  with  its 
restoration  will  buck  up  the  whole  nation  and  speed 
up  the  process  of  rehabilitation.  The  people  of  those 
once-lost  provinces  themselves  established  the  standard 
of  high  loyalty  and  unswerving  devotion.  In  a  little 
mountain  church  in  French  Lorraine  about  ten  miles 
from  Merecourt  Is  a  reproduction  of  the  well-known 
Lorraine  Cross  offered  to  France  In  1873  by  the 
French  patriots  of  the  annexed  territory.  Broken  In 
two  it  symbolized  the  sundered  region.  Typical  of 
the  faith  of  the  people  who  now  emerge  from  dark- 
ness into  dawn  was  its  prophetic  inscription,  "La 
Croix  de  Lorraine  est  hrisee  mais  ce  n'est  pas  pour 
ton  jours";  which  means,  "The  Cross  of  Lorraine  is 
broken  but  not  forever." 


112  PEACE  AND  BUSINESS 

To  return  to  practical  things :  What  is  the  American 
commercial  opportunity  in  France? 

Part  of  the  answer  has  already  been  made  in  this 
chapter.  France  will  welcome  our  industrial  coopera- 
tion both  with  men  and  with  money  but — as  the  work 
of  the  consortium  shows — there  must  not  be  any  altru- 
istic delusion.  Self-preservation,  which  is  the  first 
law  of  patriotism,  will  likewise  be  the  first  rule  of 
reconstruction,  no  less  in  France  than  in  England. 
Competition  between  nations,  which  was  one  part  of 
their  orderly  development,  will  now  be  a  fierce  struggle 
for  existence.  This  means  that  France  will  undoubt- 
edly rear  a  tariff  wall.  It  will  be  a  case  of  industrial 
safety  first.  Here,  however,  we  can  play  at  the  same 
game.  If  America  is  wise  she  will  meet  every  Euro- 
pean effort  at  tariff  by  going  one  better. 

The  struggle  to  sell  goods  will  be  one  of  the  su- 
preme after-the-war  activities.  It  is  practically  cer- 
tain that  every  European  nation  will  desire  to  pay 
for  the  goods  it  buys  from  us  with  its  own  mer- 
chandise, thus  conserving  its  cash  and  maintaining  the 
integrity  of  its  exchange.  This  is  one  excellent  rea- 
son why  we  should  establish  branch  factories  all  over 
Europe,  more  especially  in  France  and  England. 

We  must  sell  American  goods  through  American 
houses.  This  has  a  special  application  in  France, 
where  prior  to  the  war  the  great  bulk  of  our  output 
was  handled  by  foreign  agents,  mostly  Germans,  who 
invariably  pushed  their  own  goods,  which  were  cheaper 
and  more  accessible  than  our  own.  The  French  agent 
will  be  the  logical  successor  to  the  German  and  in  his 


FRANCE  AND  THE  FUTURE     113 

present  state  of  mind  about  the  Boche  he  is  not  Hkely 
to  have  any  philanthropic  interest  in  the  commodity 
of  the  country  that  ravaged  his  land. 

At  this  point  it  is  well  for  the  American  exporter 
to  appreciate  the  great  advantage  of  having  a  French 
salesman  in  France.  Hundreds  of  thousands  of 
Frenchmen  have  learned  to  speak  English  during  the 
last  four  years.  They  are  born  salesmen;  know  the 
French  temperament ;  have  infinite  patience,  which  is 
a  great  asset  in  the  selling  game. 

At  last  we  have  set  up  adequate  American  banking 
facilities  in  France.  This  is  of  course  due  to  the 
presence  of  the  American  Army.  Practically  all  the 
leading  New  York  trust  companies  have  expanded 
their  Paris  branches  into  full-fledged  banks,  and  most 
of  them  have  branches  throughout  the  country.  With 
these  institutions  we  can  duplicate  Germany's  pre-war 
business  methods.  Her  banks  and  her  foreign  trade 
marched  hand  in  hand.  As  a  matter  of  fact  they  were 
one  and  the  same  thing.  This  is  why  the  German 
exporter  could  always  give  long  credits.  It  points 
the  way  for  us. 

Just  as  the  war  created  new  conditions  of  demand 
and  supply,  so  will  peace  set  up  the  precedents  that 
will  guide  the  coming  generations  of  commerce.  Dur- 
ing those  four  years  of  blood  and  terror  merchandise 
was  self-selling.  Necessity  knows  neither  choice  nor 
haggling.  That  golden  time  for  the  profiteer  has 
passed  into  the  junk  heap  of  the  war  along  with  mil- 
lions of  tons  of  useless  gun  metal.     Henceforth  busi- 


114  PEACE  AND  BUSINESS 

ness  will  be  a  battle  of  wits.  It  will  be  a  case  of  the 
survival  of  the  fittest. 

No  man  who  has  seen  France  in  war  can  doubt  her 
ability  to  come  back.  I  watched  her  in  the  first  throes 
of  her  immense  ordeal;  year  after  year  I  returned  to 
find  her  patient  and  persevering-  through  the  long 
drama  of  her  despair,  I  beheld  her  in  the  great  hour 
of  her  deliverance.  The  serenity  with  which  she  met 
disaster  was  no  less  evidenced  when  she  drank  the 
full  cup  of  triumph. 

Thus  in  business  as  in  battle  the  French  will  not 
know  defeat. 


Ill — Holland  and  World  Trade 


HOLLAND,  in  many  respects,  was  the  pivotal 
European  neutral  during  the  war.  Her  sig- 
nificance for  world  trade,  certainly  so  far  as 
Germany  is  concerned,  is  no  less  important  in  peace. 
She  is  one  of  the  rocks  upon  which  the  discredited 
Fatherland  seeks  to  rear  the  structure  of  her  material 
regeneration. 

Holland's  war-time  ordeal  was  unmatched  by  any 
other  non-belligerent  state.  She  presented  such  a  re- 
markable picture  of  intimidation  and  distress  that  a 
resume  of  that  troubled  time  may  well  constitute  the 
approach  to  a  consideration  of  her  economic  pros- 
pects. Besides,  there  was  a  time,  in  the  midst  of  the 
world  conflict,  when  the  United  States  and  Holland 
were  dangerously  near  the  parting  of  the  ways. 

From  the  outbreak  of  hostilities  and  up  to  the  mo- 
ment the  Armistice  was  signed,  Holland  was  literally 
between  the  devil  and  the  deep  blue  sea.  On  one  side 
she  rubbed  shoulders  with  the  Hun;  on  the  other  lay 
Belgium,  a  sister  land,  prostrate  under  the  heel  of  that 
same  relentless  neighbor.  Her  coast  was  swept  by  a 
submarine-ridden  sea  that  took  cruel  toll  of  her  ship- 
ping and  rendered  her  well-nigh  inaccessible.     The 


ii6  PEACE  AND  BUSINESS 

crimson  tides  beat  about  her.  Neither  warring  group 
wanted  her  in  the  titanic  struggle.  She  had  all  the 
pinch  and  terror  of  war  without  participation  in  it. 

Wherever  you  turned  in  the  analysis  of  war-time 
Holland  you  uncovered  some  striking  illustration  of 
what  Germany  could  do  to  the  small  and  dependent 
nation.  Holland,  the  neutral,  was  full  sister  in 
trouble  to  Belgium.  One  was  tried  by  peace,  the  other 
by  war. 

So  long  as  we  shared  the  kinship  of  a  common 
neutrality  we  looked  upon  Holland  as  one  of  the 
innocent  bystanders  of  the  war.  It  was  only  when 
we  came  to  diplomatic  grips  with  the  Netherlands 
Government  over  the  seizure  of  the  Dutch  ships  in 
our  ports  in  March,  191 8,  that  there  was  any  appre- 
ciable understanding  of  what  the  great  conflict  meant 
to  Holland  and  the  price  she  was  paying  for  proximity 
and  peace.  As  a  matter  of  fact  the  shipping  seizure 
was  only  an  incident  in  Holland's  turbulent  war  ex- 
perience. It  proved  to  be  her  costliest,  though  her 
pride  was  hurt  more  than  her  pocketbook.  Meeting 
emergencies  became  the  national  Dutch  habit.  When 
Germany  was  not  making  drastic  exactions  or  holding 
a  grim  threat  over  her  unhappy  head  she  faced  new 
kinks  in  the  Allied  blockade  or  fresh  complications 
brought  about  by  the  Kaiser's  determination  to  bend 
the  doughty  little  country  to  his  will.  The  Dutch 
were  "in  Dutch"  no  matter  which  way  the  wind  blew! 

I  went  to  Holland  to  find  out.  It  was  easier  said 
than  done.  No  sea  journey  those  latter  war  days  was 
more  fraught  with  peril.    To  go  to  Holland  meant  to 


HOLLAND  AND  WORLD  TRADE       117 

run  a  gauntlet  that  bristled  with  death.  The  trips 
were  few  and  far  between.  On  the  way  over  you 
wondered  if  you  would  get  there  alive.  As  soon  as 
you  arrived  you  felt  a  kindred  concern  over  the  possi- 
bility of  getting  back  to  your  base  without  an  invol- 
untary bath  and  a  whole  skin — and  I  was  no  novice 
at  mine  and  submarine  dodging.  But  compensation 
lay  at  the  end  of  that  grim  lane  across  the  North  Sea. 

As  I  looked  again  upon  that  familiar  land  of  dike, 
canal  and  windmill  and  once  more  caught  the  hum  and 
reek  of  Amsterdam  and  Rotterdam  there  came  back 
vividly  to  my  mind  the  last  visit  I  had  made  to  Hol- 
land. It  was  the  summer  of  19 13  and  I  had  come 
straight  from  Berlin.  On  the  friendly  frontier  the 
only  jarring  note  was  an  irascible  and  punctilious 
customs  officer.  At  the  Amstel  Hotel  in  Amsterdam 
I  encountered  Andrew  Carnegie,  who  had  come  to 
dedicate  the  Peace  Palace.  The  little  man  beamed 
with  joy,  for  one  of  his  great  hopes  was  about  to  be 
realized. 

The  next  day  the  towering  mass  of  red  brick  and 
stone,  reared  by  his  millions  to  an  iridescent  dream 
that  the  world  would  sheath  the  sword,  was  conse- 
crated with  much  elaborate  speech  and  display  of  uni- 
form. The  Kaiser's  envoys  stood  side  by  side  with 
British,  French,  Italian  and  Belgian  delegates.  Amer- 
ica's name  was  magic.  Peace  was  on  every  tongue. 
Its  imposing  throne  dominated  the  landscape  of  The 
Hague,  the  cynosure  of  all  eyes — text  of  every  lead- 
ing editorial.  Such  was  the  prelude  to  the  mighty 
disillusionment. 


ii8  PEACE  AND  BUSINESS 

I  went  back  to  a  Holland  that  was  the  gateway  to 
a  world  at  war.  The  Peace  Palace  was  locked,  and 
an  oppressive  silence  hung  about  it.  An  architectural 
joke  had  become  a  universal  jest.  Those  military 
envoys  so  gay  with  gold  and  glitter  who  had  drunk 
the  toast  of  peace  faced  each  other — khaki-clad — in 
trench  and  field;  that  iridescent  dream  of  peace  had 
become  a  frightful  nightmare;  news  of  battle  domi- 
nated the  newspapers,  the  frontier  between  Holland 
and  Germany  bristled  with  bayonets  and  was  a  con- 
tinuous line  of  electrically  charged  barbed  wire. 

America  was  a  belligerent,  and  because  of  the  seiz- 
ure of  the  shipping  was  the  butt  of  bitter  attack.  To 
cap  the  irony  the  tiny  country,  the  name  of  whose 
capital  city  had  become  synonymous  with  universal 
arbitration,  was  a  cat's-paw  between  two  great  groups 
of  warring  nations  locked  in  a  life-and-death  struggle. 
No  wonder  I  thought  of  that  last  visit. 

The  first  gun  of  the  war  was  the  signal  for  the 
launching  of  a  peaceful  but  none  the  less  powerful 
German  offensive  in  Holland,  which  had  for  one  of 
its  objects  the  cornering  of  all  available  foodstuffs, 
raw  and  semifinished  materials — indeed  anything  that 
money  or  cunning  could  annex.  The  Dutch  are  not 
philanthropists ;  they  had  a  perfect  right  to  sell  what 
they  produced,  and  the  traffic  with  Germany  began. 
The  Germans  had  said  with  the  finality  of  prophets 
that  the  war  would  soon  be  over,  and  the  Dutch  be- 
lieved it.  Food  and  supplies  poured  over  the  frontier, 
and  the  era  of  the  profiteer  began. 

Holland  like  Denmark  decreed  that  half  her  sur- 


HOLLAND  AND  WORLD  TRADE       119 

plus  be  given  to  Germany  and  half  to  England.  At 
first  this  was  fairly  practicable  and  reasonable.  Just 
as  soon  as  the  submarine  became  active  sea  transport 
got  difficult.  But  even  before  this  emergency  Ger- 
many began  to  get  the  bulk  of  supplies.  One  of  the 
chief  offenders  was  the  farmer,  who  lived  in  daily 
fear  of  the  German  and  who  wanted  those  friendly 
chalk  marks  put  on  his  front  door  in  the  event  of  a 
Hun  invasion.  The  Germans  always  indicate  immun- 
ity for  the  native  by  writing  the  words  gute  Leute — 
good  people — on  door  or  wall.  Openly  or  secretly  the 
purveying  to  Germany  went  on.  Immense  food 
stocks,  piled  up  by  the  thrifty  Dutch  against  the  day 
of  need,  melted  away.  No  one  thought  of  the  mor- 
row. The  present  teemed  with  riches.  America  was 
still  a  fellow  neutral,  the  Dutch  merchant  fleet  roamed 
the  seas,  and  there  was  the  easy  confidence  that  what- 
ever emergency  rose  Uncle  Sam  was  there  to  lend  a 
helping  hand.  Holland  boomed  with  business,  yet 
unconsciously  she  was  sowing  the  wind. 

The  British  searching  of  ships  began,  and  Kirkwall 
became  a  harbor  of  inquiry  that  teemed  with  neutral 
vessels.  Scores  were  hung  up  in  prize-court  investi- 
gations, and  the  flow  of  merchandise  and  material 
from  America  to  Holland  was  checked.  A  great  fear 
rose  in  Holland,  that  her  whole  overseas  commerce 
would  come  to  a  standstill.  She  needed  merchandise 
for  her  legitimate  business  at  home;  the  mass  of  it 
now  came  from  abroad.  What  was  to  be  done  to 
save  her  trade  from  stagnation? 

Then,  and  as  a  commercial  child  of  war  necessity, 


I20  PEACE  AND  BUSINESS 

was  born  the  Netherlands  Overseas  Trust,  or  the 
"N.O.T.,"  as  it  is  better  known.  It  was  one  of  the 
most  remarkable — if  not  the  most  remarkable — busi- 
ness organizations  that  the  war  produced,  and  had  a 
vast  interest  for  the  American  merchant  concerned 
with  the  technic  of  trade.  The  idea  originated  with 
a  notable  group  of  Dutch  business  men,  including 
C  J.  K.  van  Aalst,  who  was  head  of  the  trust,  A.  G. 
Kroller,  who  was  Holland's  foremost  captain  of  cap- 
ital, and  Joost  von  Vollenhoven,  a  dominating  figure 
in  the  Netherlands  Bank. 

Briefly  stated  the  N.O.T.  was  a  joint  stock  com- 
pany formed  to  receive  in  trust  and  distribute  all 
merchandise  and  materials  imported  into  Holland.  It 
did  no  business  "on  its  own,"  but  acted  as  a  clearing 
house  or  middleman  between  the  overseas  exporter 
and  the  Dutch  importer.  Its  function  was  to  give 
foreign  governments  an  adequate  guaranty  that  all 
goods  received  in  Holland  would  not  reach  the  enemy 
directly  or  indirectly,  and  to  see  that  this  obligation 
was  fulfilled  down  to  the  ultimate  consumer.  In  other 
words  it  was  the  policeman  patrolling  the  contraband 
beat — and  he  did  not  sleep. 

Until  we  declared  war  on  Germany  Dutch  vessels 
enjoyed  unrestricted  coaling  facilities  in  American 
ports.  Now  everything  was  changed.  They  were  in 
the  harbors  of  a  country  at  war  and  could  obtain  coal 
only  under  war  conditions.  When  they  sought  bunker 
coal  they  were  informed  that  it  would  be  forthcoming 
if  they  agreed  to  carry  back  only  enough  foodstuffs 
and  materials  necessary  for  Holland's  normal  require- 


HOLLAND  AND  WORLD  TRADE       121 


ments.  America  did  not  intend  to  facilitate  the  pur- 
veying to  Germany  through  bunkering.  At  the  same 
time  Holland  was  asked  to  produce  statistics  that 
would  show  her  food  stocks  and  her  requirements. 
The  American  Government  further  stated  that  it 
would  facilitate  the  purchase  and  shipment  of  all  need- 
ful commodities — in  other  words,  make  a  normal 
ration  for  Holland  possible. 

A  long  and  tiresome  series  of  negotiations  followed. 
Dutch  commissions  sat  in  Washington  and  London. 
Every  effort  was  made  by  the  Allied  Governments  to 
bring  Holland  to  some  definite  decision.  Meanwhile 
Dutch  ships  accumulated  in  American  and  other 
Allied  ports.  Holland's  delay  was  not  so  much  due 
to  her  own  indecision  as  to  the  fact  that  Germany, 
pursuing  her  usual  bulldozing  tactics,  held  the  threat 
of  the  Mailed  Fist  over  her  head.  Finally,  and  acting 
under  the  law  of  angary,  which  freely  translated 
means  the  law  of  necessity  and  which  enables  belliger- 
ents to  employ  neutral  vessels  in  their  waters,  all 
Dutch  ships  in  Allied  harbors  were  requisitioned  by 
the  Associated  Governments.  By  the  terms  of  the 
seizure  all  vessels  were  to  be  returned  to  their  owners 
at  the  end  of  the  war  or  as  soon  after  as  possible. 

Holland  rose  up  in  her  wrath.  The  law  of  angary 
became  the  law  of  angry!  Some  of  the  Dutch  re- 
garded the  seizure  as  an  act  of  war.  The  Germans 
cunningly  fed  these  fires  of  indignation.  As  a  matter 
of  fact  the  shipping  seizure  was  an  extremely  profit- 
able and  business-like  procedure  for  Holland  because 
it  put  idle  holds  out  to  work  with  a  guarantee  of 


122  PEACE  AND  BUSINESS 

indemnity  for  every  loss.  The  one  hardship  invoked 
was  a  scarcity  of  food  in  the  Netherlands  which  sent 
prices  soaring  and  which  made  the  country  regret  the 
haste  with  which  it  had  poured  its  surplus  foodstuffs 
into  Germany  during  the  early  period  of  the  war. 

With  the  signing  of  the  Armistice  Holland's  food 
pinch  relaxed;  America's  granaries  and  cold-storage 
warehouses  emptied  their  products  upon  the  docks  of 
Rotterdam.  The  one  ill-wind  that  the  sheathing  of 
the  sword  brought  to  Queen  Wilhelmina's  domain  was 
the  precipitate  advent  of  William  Hohenzollern  and 
his  equally  fugitive  son  the  late  Crown  Prince  within 
her  borders.  All  the  horrors  of  war  did  not  end  with 
the  defeat  of  Germany. 

Throughout  the  war  Germany  realized  the  immense 
strategic  value  that  Holland  would  have  for  her  as 
soon  as  she  could  turn  to  reconstruction.  Unlike 
Switzerland,  Holland  is  a  seaport  with  a  great  mer- 
chant marine.  Germany  knew  that  a  justly  outraged 
enemy  would  demand  "ton  for  ton"  for  the  ruthless 
slaughter  of  Allied  ships  during  the  four  years  of  the 
supreme  struggle.  Germany  also  realized  that,  for 
some  time  at  least,  there  would  be  a  boycott  against 
her  goods  among  the  people  against  whom  she  had 
,  waged  such  relentless  and  unfeeling  war.  This  meant 
that  she  must  have  friendly  markets  in  which  to  dis- 
pose the  merchandise  stored  up  during  the  conflict 
and  likewise  the  goods  that  would  be  turned  out  with 
feverish  speed  in  the  effort  to  recoup  her  broken  com- 
mercial fortunes. 

The  net  result  was  that  she  used  merchandise  as 


HOLLAND  AND  WORLD  TRADE       123 

propaganda  in  Holland  throughout  the  war.  She  did 
this  at  great  sacrifice  to  her  consumers  at  home.  The 
ruling  passion  for  world  trade  was  strong  even  in  the 
midst  of  a  cataclysm  that  threatened  her  imperial  ex- 
istence. The  whole  story  of  Germany's  war-time 
commercial  campaign  in  Holland,  therefore,  has  a  su- 
preme interest  for  the  American  exporter  for  the 
simple  reason  that  what  happened  in  Holland  in  war 
is  being  duplicated  to-day  in  every  other  neutral 
country. 

You  cannot  comprehend  the  German  economic 
offensive  without  first  analyzing  the  Dutch  business 
man.  The  untraveled  American  looks  upon  the  Dutch- 
man as  a  stolid,  amiable  person,  wedded  to  his  pipe, 
clicking  about  in  his  wooden  shoes,  and  with  his 
horizon  bounded  by  the  canal  that  flows  past  his  door. 
This  picture  is  remote  from  the  truth,  so  far  as  com- 
mercial leadership  is  concerned.  The  Dutch  business 
mind  is  one  of  the  keenest  in  the  world.  Likewise  the 
Dutch  trade  vision — Hke  those  Dutch  fleets  of  other 
days — sweeps  the  seven  seas.  The  flag  of  the  Nether- 
lands is  planted  by  right  of  discovery  and  conquest  in 
some  of  the  richest  colonies  of  the  East;  her  money 
is  employed  by  the  millions  in  American,  Russian  and 
British  securities.  Holland  has  always  adventured. 
Berlin  and  Vienna  never  reached  an  international 
financial  position  comparable  with  that  of  Amsterdam, 
while  Rotterdam  in  normal  times  is  the  rival  of  Ham- 
burg and  Bremen  as  a  world  port.  Hence  the  impor- 
tance of  the  Dutch  as  economic  factors. 

Not  even  the  French  exceed  the  Dutch  in  thrift  and, 


124  PEACE  AND  BUSINESS 

shrewdness.  From  royal  household  to  peasant  hut 
the  watchword  is  "Be  practical."  An  American  diplo- 
mat in  Holland  told  me  of  the  characteristic  contrast 
that  he  found  when  he  went  to  pay  his  respects  to  the 
Queen  Mother.  She  received  in  a  stately  room  in  her 
palace,  hung  with  rich  draperies  and  crowded  with 
works  of  art.  Yet  in  one  corner  stood  a  big  ugly 
stove,  and  on  top  a  teakettle  purred  and  steamed.  The 
lady  was  determined  to  be  cozy. 

One  night  during  my  last  visit  to  Holland  I  dined 
with  some  Americans  at  a  restaurant  at  Scheveningen, 
the  fashionable  suburb  of  The  Hague.  We  drove  out, 
but  the  only  Dutchman  present — one  of  the  richest 
men  in  Holland — rode  out  on  his  bicycle  with  the  tails 
of  his  evening  coat  flapping  in  the  breeze.  When 
someone  asked  him  why  he  had  chosen  such  a  humble 
steed  he  replied,  'T  cannot  get  any  petrol  for  my 
motor  car,  I  don't  like  the  smelly  tram,  so  I  used  my 
wheel."  He  had  an  automobile  that  was  not  working 
and  he  was  determined  not  to  waste  money  on  any 
other  kind  of  transportation.  His  was  the  typical 
state  of  mind. 

The  Dutchman  knows  how  to  drive  a  good  bargain. 
You  are  not  long  In  Holland  before  you  find  out  the 
truth  of  Canning's  famous  epigram : 

In  matters  of  commerce  the  fault  of  the  Dutch 
Is  giving  too  little  and  asking  too  much. 


HOLLAND  AND  WORLD  TRADE       125 


II 

The  moment  you  dug  into  the  German  business 
game  in  Holland  you  uncovered  German  commercial 
cunning  in  its  favorite  role  of  substitution.  Indeed 
substitution  is  almost  synonymous  with  the  name  of 
German  trade  abroad.  In  the  Netherlands,  however, 
it  has  gone  the  limit.  One  reason  is  that  before  the 
war  a  great  many  standard  advertised  articles  such  as 
soaps  and  razors  from  England  and  America  were 
used  there.  With  the  setting  up  of  the  blockade  the 
import  of  much  of  this  merchandise  ceased.  The 
Dutch  shopkeepers  had  to  have  it  because  it  was  in 
demand,  and  the  Germans  proceeded  to  supply  it. 
Their  methods  were  as  brazen  as  they  were  pictur- 
esque.    Here  are  some  side  lights  on  the  traffic : 

A  certain  dental  preparation  from  America  had 
attained  considerable  vogue  in  Holland.  When  the 
supply  gave  out  the  Germans  made  a  very  bad  imita- 
tion, packed  it  in  the  same  sort  of  tube  as  the  original, 
gave  it  a  name  that  to  the  Dutchman  looked  like  the 
Yankee  trade-mark,  and  stamped  on  the  label  the  name 
of  a  fictitious  maker. 

To  try  out  the  system  I  asked  for  a  tube  of  the 
original  stuff  in  an  Amsterdam  shop,  whereupon  the 
clerk  said,  "I  am  sorry  we  have  not  got  what  you 
want.  We  are  just  out  of  it,  but  here  is  something 
from  America  made  by  the  same  firm  and  just  as 
good."    Then  he  offered  the  German  substitute. 


126  PEACE  AND  BUSINESS 

Take  soap.  Before  the  war  a  large  amount  of  Brit- 
ish and  American  soap  was  used  in  Holland.  The 
imported  article  gradually  faded  away  from  the  shop 
shelves.  Once  more  the  German  came  to  the  rescue. 
It  happened  that  one  of  these  soaps  had  been  exten- 
sively advertised.  The  German  imitators  prepared 
and  sold  a  cake  that  in  shape,  name,  wrapper  and  car- 
ton perfectly  resembled  the  original  article.  To  make 
the  fake  complete  they  printed  on  the  wrapper  the 
precise  wording  in  English — including  the  catch  ad- 
vertising line  of  the  soap — that  appeared  on  the  orig- 
inal cover.  In  the  great  majority  of  instances  it  was 
accepted  by  the  purchaser  as  the  real  thing.  He  dis- 
covered that  he  had  been  "done  in"  only  when  he  be- 
gan to  test  its  much-vaunted  lathering  qualities. 

The  cleverest  piece  of  substitution,  however,  that 
came  to  my  knowledge  in  Holland  relates  to  the  blades 
of  one  of  the  best-known  American  saiety  razors, 
which  has  enjoyed  an  immense  sale  on  the  Conti- 
nent. Its  name  is  almost  as  familiar  in  Holland  as 
it  is  in  Illinois.  With  the  clamping  down  of  the 
blockade  the  supply  of  genuine  blades  was  cut  off 
for  some  neutral  countries,  especially  Holland.  Thou- 
sands of  Dutchmen  had  these  razors,  but  they  ran 
out  of  blades.  Again  the  German  found  a  way  to 
meet  their  requirements,  this  time  in  a  fashion  that 
reveals  imitation  at  its  best — or  I  should  say  at  its 
worst. 

At  first  glance  you  cannot  tell  the  blades  apart.  In 
size,  identification  marks,  edge — in  fact  in  every  de- 
tail they  seem  to  be  identical.     On  close  examination 


HOLLAND  AND  WORLD  TRADE       127 

you  find  that  the  German  imitation  is  made  of  in- 
ferior metal,  that  it  is  not  cut  so  true  as  the  Amer- 
ican, and  that  the  numbering  and  lettering  are  slightly- 
different.  Both  have  the  words  U.S.A.  Patent.  The 
German,  however,  has  a  different  patent  number. 
It  also  bears  the  letters  D.R.P. — which  stand  for 
Deutsche  Reich  Patent,  Royal  German  Patent — and 
a  spurious  patent  number  that  looks  like  the  real 
American  number.  Likewise  it  is  stamped  Bte  France 
— patented  in  France. 

Even  more  ingenious  is  the  wrapper,  both  on  the 
blade  and  the  little  box,  which  holds  the  usual  lot  of 
a  dozen  blades.  On  the  original  wrapper  and  box  is 
the  picture  of  a  man's  head.  The  German  imitation 
is  an  exact  facsimile — picture  and  all — of  the  Amer- 
ican and  Canadian  package,  except  that  it  gives  the 
countenance  a  distinct  German  cast.  He  does  not  ap- 
pear to  like  the  advertising  he  is  getting,  because  he 
scowls  in  the  lithograph.  The  one  concession  that 
the  German  fakers  have  made  to  decency  is  that  they 
have  omitted  the  words  Made  in  U.S.A.  from  the 
wrapper  and  box. 

I  took  the  precaution  to  show  the  blades  and  wrap- 
pers to  the  London  agent  of  the  razor  company,  and 
she  at  once  pronounced  them  clever  imitations.  In 
fact  no  genuine  blades  have  been  shipped  into  Hol- 
land for  more  than  two  years. 

The  Germans  did  not  put  their  imitations  on  the 
market  with  their  usual  flair  of  saving  the  trade  day. 
Knowing  the  penalties  they  were  incurring,  they  plant- 
ed them  at  first.     They  advertised  in  a  few  news- 


128  PEACE  AND  BUSINESS 

papers  that  some  of  the  blades  were  available.  I 
found  upon  investigation  that  the  articles  were  manu- 
factured at  Solingen,  which  is  the  German  Sheffield, 
and  distributed  from  Oldenzaal,  a  small  town  on  the 
Dutch-German  frontier.  This  explained  the  whole 
business.     No  further  inquiry  was  necessary. 

Run  the  roster  of  German  substitution  in  Holland 
and  you  uncover  choice  "English"  sauce  that  was 
mixed  in  Stuttgart;  imported  "Turkish"  cigarettes 
rolled  in  Hamburg;  "American"  typewriter  ribbons 
made  in  Frankfort ;  and  so  on  down  the  line. 

Behind  all  this  clever  imitation  is  a  big  idea:  By 
making  these  substitutes  for  the  real  American  and 
British  articles  inferior  in  quality  and  therefore  un- 
satisfactory to  the  consumer  the  Germans  expect  to 
break  down  the  faith  in  the  original  products.  It  will 
enable  them  to  push  their  own  goods,  which  will  be 
cheaper  in  price.  In  the  event  of  any  prejudice  against 
German  goods,  which  is  unlikely  in  Holland,  they 
only  need  to  employ  the  printing  press,  turn  out  fac- 
simile labels  or  stamp  their  wares  "Made  in  Holland." 

But  traffic  in  imitations  is  only  a  small  part  of  the 
German  economic  penetration  in  Holland.  In  spite 
of  the  war  a  big  business  was  carried  on  in  genuine 
commodities.  This  discloses  another  kind  of  Teu- 
tonic jugglery.     Let  me  illustrate  with  bicycles. 

More  bicycles  are  used  in  Holland  per  capita  than 
in  any  other  country  in  the  world.  It  is  safe  to  say 
that  one  million  machines,  or  one  for  every  six  inhabi- 
tants, are  owned  there.  Women  shop,  go  to  church, 
pay  their  calls  on  bicycles.     No  Dutch  household  is 


HOLLAND  AND  WORLD  TRADE   129 

complete  without  one.  It  is  said  that  one  reason  for 
the  widespread  sobriety  in  Holland  is  that  the  men 
must  stay  sober  in  order  to  remain  on  their  wheels. 
Most  of  the  paths  border  on  the  canals  and  the  sHght- 
est  slip  plunges  the  rider  into  slimy  water.  Be  that 
as  it  may,  the  main  fact  is  that,  being  the  land  of  bi- 
cycles, it  needs  an  immense  amount  of  bicycle  acces- 
sories. 

Before  the  war  many  British  and  some  American 
wheels  were  used  in  Holland.  During  the  war  Ger- 
many did  her  utmost  to  capture  that  trade.  A  con- 
crete example  will  show  how  the  business  was  ob- 
tained and  also  nailed  down  for  the  future.  A  bicycle 
dealer  in  Amsterdam,  unable  to  get  rims  from  Eng- 
land, sought  a  German  dealer. 

"Yes,"  replied  the  German ;  "I  can  get  you  a  thou- 
sand rims,  but  you  must  sign  a  contract  with  me  to 
use  only  German  rims  and  German  wheels  after  the 
war." 

The  Dutchman  had  to  have  the  rims  or  shut  up 
shop,  and  he  signed  the  contract.  It  was  a  common 
occurrence. 

Here  is  another  case  that  shows  the  German  in- 
roads into  Anglo-Saxon  trade.  An  Englishman  living 
at  The  Hague  wanted  to  buy  some  toys  for  his  chil- 
dren.    At  the  shop  he  asked  for  British-made  goods. 

"1  have  a  few  British  dolls,"  said  the  proprietor; 
*'but  a  fine  line  of  German  toys." 

Then  he  explained :  *Tf  I  want  toys  from  Eng- 
land I  have  to  get  them  through  the  Netherlannds 
Overseas  Trust,  which  requires  a  deposit  of  money. 


I30  PEACE  AND  BUSINESS 

on  which  I  lose  interest ;  a  delay  of  many  months,  with 
the  chance  that  I  cannot  get  the  goods  at  all.  On  the 
other  hand  a  postal  card  to  Germany  brings  what  I 
want  in  a  week." 

A  serious  situation  developed  with  films.  A  cer- 
tain American  camera  is  almost  as  well-known  in 
Holland  as  it  is  in  the  States.  Like  the  safety  razor 
that  I  described,  it  is  a  staple.  The  Dutch  own  thou- 
sands of  these  cameras  and  they  need  large  quantities 
of  roll  film.  When  the  exports  of  films  from  America 
ceased  the  Germans  saw  a  great  chance  to  exploit  their 
wares.  Before  the  war  they  were  content  to  leave  this 
branch  to  the  Americans.  Now  they  launched  a  whole 
new  industry  in  roll  film  and  flooded  the  market.  All 
the  film  comes  from  the  well-known  Actien  Gesells- 
chaft  Fiir  Anilin — the  great  German  dye  trust  known 
as  the  "Agfa."  The  Germans  have  also  built  up  a 
new  trade  in  cameras,  in  which  they  have  imitated  all 
the  well-known  American  makes  in  everything  but 
efficiency  and  cheapness. 

The  irony  of  the  film  situation  is  that  the  American 
company  spent  a  fortune  popularizing  amateur  pho- 
tography in  Holland,  and  now  the  Germans  get  the 
benefit  of  that  expensive  educational  campaign. 

While  I  was  at  The  Hague  the  agent  of  a  leading 
American  maker  of  cameras  and  supplies  went  to  see 
one  of  his  largest  customers,  who  asked:  "Would 
you  like  to  see  my  stock?" 

"Yes,"  was  the  reply. 

He  was  shown  a  large  wareroom  packed  to  the  ceil- 
ing with  German  cameras  and  film  packages. 


HOLLAND  AND  WORLD  TRADE       131 

"Do  you  blame  me  ?"  he  asked. 

The  American  was  bound  to  admit  that  he  could 
not. 

Then  the  Dutchman  continued:  "If  I  had  de- 
pended upon  the  Allies  for  a  stock  I  should  be  a  pau- 
per. I  have  a  big  business ;  I  must  keep  it  going. 
After  the  war  I  must,  in  honor  bound,  help  the  people 
who  help  me  now." 

To  give  you  some  idea  of  how  the  Germans  are 
making  hay  in  the  film  business  let  me  quote  some 
prices.  The  cost  of  roll  film  for  a  certain  small  Amer- 
ican camera  in  Holland  was  fifty  cents  in  Dutch 
money ;  the  German  film  to-day  of  the  same  type  costs 
a  dollar  and  five  cents.  American  cinema  film — which 
the  Germans  are  now  making  in  large  quantities — 
was  twenty-four  cents  a  meter;  the  German  brand 
brings  sixty  cents. 

This  leads  naturally  to  the  operations  of  the  huge 
German  film  trust,  whose  activities  in  Holland  are  full 
of  significance  for  America  and  England.  In  191 7 
all  the  leading  German  film-producing  companies  such 
as  the  Decla,  the  Eiko  and  the  Oliver  concerns — they 
produce  and  distribute  the  principal  pictures  and  topi- 
cal reviews — were  merged  into  a  huge  company.  The 
Agfa,  makers  of  raw  film,  were  also  tied  up  in  the  en- 
terprise. Thus  manufacturer,  producer  and  distrib- 
utor were  allied.  As  usual  with  German  big  business, 
the  Government  came  across  with  a  fat  subsidy  and 
became  a  partner. 

The  trust  at  once  started  an  intensive  campaign  to 
comer  the  exhibition-film  business  in  all  neutral  Euro- 


132  PEACE  AND  BUSINESS 

pean  countries.  A  special  drive  was  made  in  Holland. 
The  methods  are  not  unfamiliar  to  persons  who  have 
studied  the  operations  of  certain  monopolies.  The 
main  purpose  has  been  to  flood  these  neutrals  with 
complete  programs — comedy,  tragedy,  topical  reviews 
— thus  preventing  the  theaters  from  using  any  other 
films.  Since  few  films  except  propaganda  pictures 
found  their  way  into  Holland  during  the  war  from 
the  Allied  countries,  there  was  an  excellent  opening 
for  the  young  giant.  The  trust  is  also  leasing  and 
operating  its  own  theaters,  including  some  in  Holland. 

The  trust  offered  films  at  a  low  price,  but  on  con- 
dition that  the  exhibitor  use  only  its  product  after  the 
war.  If  he  would  not  accede  to  these  harsh  terms  he 
was  compelled,  in  the  great  majority  of  cases,  to  close 
his  house.  Happily  a  British  company  has  entered 
Holland  for  the  express  purpose  of  combating  the 
German  octopus. 

Germany  needs  powerful  banking  connections  to 
bulwark  her  ramified  commercial  system  in  Holland. 
Credit  is  the  backbone  of  business.  In  every  country 
therefore  she  has  at  least  one  outstanding  financial 
stronghold.  Invariably  it  is  the  principal  agent  of 
that  vast  and  sometime  sinister  institution,  the 
Deutsche  Bank  of  Berlin,  citadel  and  pay-master  of 
the  German  worldwide  economic  penetration.  To 
camouflage  this  stewardship  it  frequently  happens  that 
some  unimportant  German  bank  sets  up  a  dummy 
branch  in  a  neutral  land.  But  it  is  the  Deutsche  Bank 
that  exerts  the  influence,  always  operating  through 
some  well-known  local  concern. 


HOLLAND  AND  WORLD  TRADE        133 

Take  the  other  side  of  the  picture,  which  is  the 
Dutch  investment  hnk  with  America.  When  you  real- 
ize that  at  one  time  Holland  had  nearly  $50,000,000 
in  United  States  Steel  Common  alone,  you  get  some 
idea  of  the  way  her  money  has  been  put  into  our  se- 
curities. Glance  at  the  financial  page  of  any  Dutch 
newspaper  to-day  and  you  will  find  at  least  a  hundred 
"Yankees"  quoted. 

The  Dutchman  is  a  born  speculator.  As  one  Dutch- 
man expressed  it  to  me,  "We  Dutch  like  to  take  a  fi- 
nancial chance  with  music  accompaniment."  By 
"music"  he  meant  the  thrill  and  hazard  of  the  ticker. 
A  Hollander  will  sell  anything  that  he  possesses,  ex- 
cept his  family,  on  the  chance  of  buying  it  back  again 
at  a  lower  price. 

This  accounts  for  the  fact  that  his  money  has 
wandered  so  far  afield.  Holland  has  loaned  money  all 
the  way  from  China  to  Peru.  She  has  millions  in 
Chinese  and  Japanese  loans,  in  the  Dutch  East  Indies, 
and  in  most  of  the  Central  and  South  American  states. 
Her  holdings  in  Russia,  to  her  present  sorrow,  have 
been  larger  than  in  any  other  country  with  the  pos- 
sible exception  of  the  United  States.  More  than  sixty 
Russian  loans  are  held  in  Holland. 

Our  chief  interest,  however,  is  the  American  end. 
More  than  two  hundred  of  our  stocks  and  bonds  are 
listed  in  Amsterdam.  It  is  customary  on  the  Amster- 
dam Bourse  to  deal  in  bearer  shares.  Dutch  holders 
of  American  railway  and  industrial  securities  there- 
fore receive  their  stock  in  the  name  of  one  of  various 
administrative  officers,  who  transfer  the  stocks  dealt 


134  PEACE  AND  BUSINESS 

in  on  the  exchange  to  their  names  and  then  issue  their 
own  certificates  "to  bearer."  This  plan  protects  the 
Dutch  holders  against  forged  certificates,  and  makes 
trading  on  the  Bourse  simple  by  substituting  a  local 
transfer  office  for  the  home  office  of  the  company. 
It  also  provides  a  place  in  Amsterdam  where  dividends 
may  be  promptly  collected. 

Analyze  the  Dutch  investments  in  America  and  you 
find  that  they  have  made  some  real  "killings."  In 
the  sixties,  for  instance,  Holland  bought  Chicago  & 
Northwestern  seven  per  cent  bonds  at  sixty-five.  She 
likewise  bought  Chicago,  Milwaukee  &  St.  Paul  and 
Northern  Pacific  round  twenty-five.  She  was  also  a 
large  buyer  of  Union  Pacific  and  Santa  Fe  shares 
after  their  re-organization  and  when  they  were  quoted 
below  twenty-five.  Still  more  fortunate  was  the  pur- 
chase by  many  Dutchmen  of  Steel  Common  when  it 
was  down  to  eighteen.  Thus  huge  fortunes  have  been 
made  on  "Americans"  at  various  times.  On  the  other 
hand,  many  Dutchmen  have  bought  Yankee  lemons. 

You  can  never  tell  the  length  of  a  Dutchman's  purse 
by  his  personal  appearance.  I  am  reminded  of  this 
by  an  incident  that  happened  one  day  at  Amsterdam. 
I  was  going  to  lunch  with  the  owner  of  one  of  the 
largest  Dutch  newspapers,  himself  a  heavy  investor 
in  American  securities.  Pointing  to  a  rather  shabby- 
looking  man,  he  said :  "That  man  owns  more  United 
States  Steel  Common  than  almost  any  other  individual 
in  Holland." 

Then  he  made  the  following  illuminating  statement : 
"You  seldom  see  a  Hollander  wear  a  diamond  shirt 


HOLLAND  AND  WORLD  TRADE       135 


stud;  in  fact  you  nowhere  find  a  less  ostentatious  or 
flashy  people  than  ours.  Showiness  is  not  a  national 
fault.  On  the  contrary,  we  equal  the  Scotch  in  so- 
briety and  lean  toward  the  Oriental  instinct  for  hoard- 
ing. Most  Dutchmen  are  better  off  than  you  would 
suppose  from  their  looks,  and  when  they  die  their 
heirs  when  dividing  the  estate  are  more  likely  to  be 
agreeably  surprised  than  the  reverse." 


136  PEACE  AND  BUSINESS 


III 

Holland  has  one  financial  link  with  America  which 
deserves  a  little  chapter  all  its  own,  first  because  of 
the  economic  importance  of  the  bond,  and  second  by 
reason  of  the  dominating  personality  through  which 
it  is  expressed,  I  refer  to  petroleum  and  its  Dutch 
king,  Henry  W.  A.  Deterding,  who  by  common  con- 
sent and  with  one  possible  exception  ranks  first  in  the 
Netherlands  gilded  gallery. 

To  the  average  American  this  is  an  unknown  name, 
but  down  in  Wall  Street  and  on  the  stock  exchanges 
of  London,  Paris,  Chicago,  San  Francisco,  Petrograd 
and  elsewhere  it  has  a  sort  of  magic  glamor.  Like- 
wise in  that  towering  temple  of  commerce  at  Twenty- 
six  Broadway  in  New  York,  where  the  Standard  Oil 
Company  holds  forth,  it  is  feared  and  respected,  for 
Deterding  is  the  only  man  who  has  fought  that  com- 
pany to  a  standstill  and  brought  it  to  terms.  His  story 
is  as  fascinating  as  any  romance  of  self-made  Amer- 
ican millions. 

Deterding  is  the  son  of  an  obscure  Amsterdam  sea 
captain.  Four  generations  of  his  forbears  ranged  the 
seas,  but  he  was  destined  for  trade.  He  started  as  a 
messenger  in  a  local  bank  and  worked  his  way  to  a 
chief  clerkship.  At  twenty-two,  when  he  saw  no 
further  advancement  in  sight,  he  went  to  Java  in  the 
service  of  the  Netherlands  Trading  Society.  At  once 
he  showed  such  marked  executive  and  organizing  abil- 


HOLLAND  AND  WORLD  TRADE   137 

ity  that  in  a  year  he  had  made  himself  conspicuous. 
"Deterding  has  a  great  future,"  became  the  famihar 
remark. 

Opportunity  now  knocked  at  the  young  man's  door 
and  he  was  ready.  Early  in  the  nineties  August  Kess- 
ler — half  German  and  half  Dutch — incorporated  at 
The  Hague  The  Royal  Dutch  Company  for  the  work- 
ing of  petroleum  wells  in  Netherlands  India.  This  is 
the  concern  now  universally  known  as  the  Royal 
Dutch.  Its  original  capital  was  only  $500,000.  Yet 
from  that  modest  beginning  has  developed  the  mighty 
world-wide  corporation  bulwarked  by  billions  which 
contests  with  the  Standard  Oil  for  the  petroleum 
stewardship, 

Kessler  had  a  big  vision,  for  he  saw  the  possibili- 
ties of  a  great  native  oil  development.  He  set  up  his 
headquarters  at  Batavia.  In  casting  about  for  a  bright 
young  man  to  help  him  he  heard  of  Deterding  and 
engaged  him  as  inspector.  Deterding  at  once  displayed 
an  uncanny  instinct  for  the  oil  business.  He  knew 
just  where  to  drive  a  well  or  set  up  an  installation. 
When  Kessler  died,  in  1896,  the  youthful  inspector 
succeeded  him  as  general  manager.  At  that  time  the 
Standard  Oil  Company  controlled  the  oil  trade  in 
China  and  the  greater  part  of  the  Far  East.  With 
limited  means  and  equally  limited  facilities  Deterd- 
ing began  to  contest  that  suprem.acy,  and  succeeded. 

Gradually  the  Royal  Dutch  developed  in  scope, 
wealth  and  power.  The  oil  conquest  of  the  Dutch 
East  Indies  complete,  Deterding  turned  to  Russia  and 
Roumania.    But  he  labored  under  the  handicap  of  in- 


138  PEACE  AND  BUSINESS 

adequate  transport,  so  vitally  necessary  in  the  petro- 
leum trade.  Then  he  achieved  a  master  stroke  by 
forming  a  union  with  the  Shell  Transport  and  Trading 
Company,  of  London.  This  concern  has  a  picturesque 
story.  It  was  founded  by  Marcus  Samuel — now  Sir 
Marcus  Samuel,  Baronet — who  began  as  a  humble  oil 
dealer  in  London.  His  father  was  a  dealer  in  Japa- 
nese curios,  mainly  shells,  in  East  London.  Marcus 
had  the  large  outlook  of  his  race.  He  perceived  that 
there  was  a  big  profit  in  transporting  oil  from  the 
Near  East  in  competition  with  the  Standard,  who  en- 
joyed what  amounted  to  a  monopoly  on  the  business. 
He  started  the  Shell  Transport  Company,  named  sen- 
timentally after  the  chief  article  in  which  his  father 
traded,  and  equipped  a  fleet  which  now  became  an 
annex  of  the  Deterding  interests.  About  the  same 
time  Deterding  made  an  alliance  with  the  Rothschilds 
and  took  over  the  Asiatic  Petroleum  Company.  The 
son  of  the  Amsterdam  sea  captain  was  now  a  mighty 
factor  to  be  reckoned  with,  and  a  battle  royal  with 
the  Standard  started. 

There  is  no  space  here  to  tell  the  whole  story  of 
that  struggle,  much  as  I  would  like  to  do  so.  The 
German  chapter,  however,  will  illustrate  the  Deterding 
method.  Up  to  the  first  decade  of  the  twentieth  cen- 
tury the  Standard  had  the  German  oil  trade  bottled 
up.  It  sold  about  80,000  tons  of  benzine  there  a  year, 
which  was  a  big  item  for  those  days.  Deterding  de- 
termined to  get  some  of  that  business.  He  went  to 
Germany,  looked  over  the  field  and  decided  to  set  up 
a  plant  at  Diisseldorf.     Here  he  had  the  Rhine  as  a 


HOLLAND  AND  WORLD  TRADE       139 

waterway,  which  was  an  important  item.  Then  he 
picked  out  a  live  German  and  asked  him  to  sell  oil. 

"But  the  Standard  has  all  the  contracts,"  was  his 
immediate  reply. 

"Then  it  is  your  job  to  get  some  of  them,"  de- 
murred Deterding.    "Make  contracts  at  any  price," 

The  German  followed  instructions  and  disposed  of 
a  carload  of  oil  in  a  short  time.  The  German  dealers 
swallowed  the  price  bait.  Before  long  the  Royal 
Dutch  had  cut  so  deeply  into  the  Standard's  German 
business  that  they  were  glad  to  make  an  agreement 
to  divide  the  business. 

The  same  procedure  happened  in  China,  but  only 
after  a  bitter  price  war.  Everywhere  Deterding  bat- 
tled with  the  Standard  on  its  own  ground  and  got 
more  than  a  foothold.  Consolidation — that  mother  of 
trusts — became  his  passion,  and  he  drew  round  him 
a  group  of  concerns  whose  capitalization  reaches  many 
hundreds  of  millions.  The  Royal  Dutch-Shell  became 
the  parent  or  holding  company,  the  Batavia  Petroleum 
Company  the  producing  end,  the  Anglo-Saxon  Oil 
Company  the  shipping  agency  and  the  Asiatic  Oil 
Company  the  distributing  medium.  Such  is  the  line- 
up of  the  European  and  Eastern  machine. 

Deterding  now  reached  out  for  America.  In  turn 
Mexico,  Venezuela,  California  and  Oklahoma  came 
into  his  oil  domain.  In  all  these  places  he  organized 
companies,  put  down  wells,  built  pipe  lines  and  set 
up  shop  generally.  To-day  the  sun  never  sets  upon 
his  business.  He  is  in  truth  the  Dutch  John  D.  Rocke- 
feller.    In  manner  he  resembles  the  late  Henry  H. 


I40  PEACE  AND  BUSINESS 

Rogers,  who  could  have  a  big  hearty  way  with  him 
when  he  chose. 

Deterding  rules  his  realm  from  London,  where  I 
have  seen  him  in  action  and  in  repose.  He  sits  at  a 
flat-topped,  fan-shaped  desk  in  a  modest  room  in  the 
rear  of  a  fine  building  in  "The  City,"  At  work  he 
is  a  dynamo  of  energy  reminiscent  of  E.  H.  Harriman 
on  a  busy  day.  From  his  office  radiate  private  wires 
that  reach  everywhere.  This  plump,  animated  man 
with  keen  black  eyes  and  white  hair,  who,  like  most 
Dutchmen,  speaks  English  perfectly,  knows  what  is 
happening  throughout  his  far-flung  empire.  With  him 
knowledge  is  power. 

Analyze  his  methods  and  you  discover  that  they 
are  exactly  the  opposite  of  those  of  the  Standard  Oil 
Company,  that  flourished  before  publicity  applied  its 
probe.  He  explained  them  to  me  one  night  after  din- 
ner as  he  sat  smoking  a  fat  black  cigar  and  blowing 
rings  into  the  air. 

"My  theory  in  building  up  the  Royal  Dutch,"  he 
said,  "has  been  to  create  good-will.  My  motto  is 
Live  and  let  live!  To  crush  a  rival  is  to  make  an 
enemy;  to  buy  out  a  competitor  at  a  cheap  price  is 
like  hiring  a  good  man  at  a  small  wage.  It  is  bad 
business,  because  it  creates  discontent.  If  consolida- 
tion is  necessary,  make  it  worth  while  for  the  con- 
cern you  need.     It  then  becomes  a  real  partner." 

Such  is  the  creed  of  the  Dutch  Croesus.  His  only 
rival  is  A.  G.  Kroller,  who  exerts  the  same  power 
at  home  that  the  oil  king  does  abroad.  He,  too,  is  one 
of  the  self-made,  for  he  is  the  son  of  a  carpenter  of 


HOLLAND  AND  WORLD  TRADE       141 

Haarlem.  He  has  the  conspicuous  distinction  of  be- 
ing the  only  member  of  the  Dutch  financial  autocracy 
who  did  not  get  his  start  in  the  East  Indies.  He 
started  as  a  clerk  in  the  great  shipowning  and  mer- 
chandising house  of  Wm.  H.  Miiller  &  Co.,  whose 
interests  reach  from  Berlin  to  Buenos  Aires;  mar- 
ried the  daughter  of  the  head  of  the  house,  and  is  now 
in  supreme  command.  He  represents  what  a  com- 
bination of  the  beef  trust,  the  International  Mercan- 
tile Marine,  the  Bethlehem  Steel  Company  and  a  firm 
like  W.  R.  Grace  &  Co.  would  mean  in  the  United 
States.  He  has  represented  the  German  Government 
in  practically  every  big  business  deal  that  it  has  made 
in  Holland.  He  owns  The  Fatherland,  which  is  the 
leading  pro-German  organ.  Through  him  the  Ham- 
burg-American line  sold  recently  its  immense  hold- 
ings in  the  Holland-American  line,  first  because  it 
needed  the  money  and  second  because  without  Ger- 
man taint  the  last-named  company  will  be  useful  to 
Germany  after  the  war. 

I  could  continue  this  list  of  Dutch  captains  of  capi- 
tal for  a  good  while,  and  tell  of  men  like  C.  J.  K.  Van 
Aalst,  head  of  the  Netherlands  Overseas  Trust,  whose 
real  job  is  managing  director  of  the  vast  Neder- 
landsche  Handel  Maatschappy — the  Netherlands 
Trading  Society — in  which  most  of  his  colleagues 
served  their  apprenticeship ;  J.  T.  Cremer,  the  Mar- 
shall Field-James  Stillman  of  Holland,  who  helped 
to  build  up  that  society,  and  now  Dutch  Minister  to 
the  United  States;  H.  Colijn,  head  of  the  Batavia  Oil 


142  PEACE  AND  BUSINESS 

Company  and  the  mate  of  Deterding  in  prestige  and 
fortune;  and  all  the  rest. 

What  is  the  American  commercial  opportunity  in 
Holland  ?  When  all  is  said  and  done  this  is  the  really 
important  matter.  Before  we  take  a  look  into  the 
future  we  must  glance  at  the  past.  You  find  that,  as 
in  France,  Spain  and  other  countries  where  we  over- 
looked big  business  chances,  we  intrusted  our  affairs 
to  the  hands  of  agents  who  were  either  German  by 
birth  or  pro-German  in  tendency.  Whenever  possible 
they  diverted  trade  to  the  Fatherland. 

In  the  second  place  we  had  no  direct  cable  connec- 
tions with  Holland.  Before  the  war  all  overseas  com- 
munication between  the  United  States  and  the  Nether- 
lands came  by  way  of  Emden  or  London.  In  either 
case  every  American  trade  secret  filtered  through  the 
agents  of  our  competitors.  The  Emden  route  was 
nearer  and  cheaper,  and  this  means  that  the  bulk  of 
it  passed  under  German  scrutiny. 

Another  handicap  was  the  fact  that,  like  England, 
we  had  no  bank  in  Holland.  We  had  to  operate, 
through  German  institutions  or  banks  in  London,  and 
in  terms  of  the  mark  or  the  pound  sterling.  Already 
England  has  set  about  to  rectify  this  mistake.  Her 
financial  outposts  in  Spain  will  inevitably  be  followed 
by  similar  enterprises  in  the  Netherlands. 

All  this  means  that  if  America  is  to  hold  her  own 
in  Holland  she  must  have  a  direct  cable.  American 
trade  representatives,  and,  if  possible,  her  own  bank. 
The  wide  holdings  of  our  securities  by  the  Dutch 
would  alone  justify  the  latter  step. 


HOLLAND  AND  WORLD  TRADE        143 

The  Dutch  are  aHve  to  their  post-war  opportuni- 
ties. Through  the  influence  of  M.  W.  F.  Treub,  Min- 
ister of  Finance,  a  new  economic  party  has  been  cre- 
ated to  organize  and  conserve  the  business  of  the  coun- 
try. It  means  an  era  of  economic  statesmanship.  The 
Netherlands  Export  Society,  formed  to  equaHze  war 
profits  and  try  to  put  some  check  on  excessive  trad- 
ing with  the  Germans,  is  another  evidence  of  this 
growing  appreciation.  Still  a  third  is  the  lately  en- 
acted corporation  law  which  prohibits  aliens  from 
holding  preferred  stock  in  Dutch  corporations.  This 
is  a  direct  blow  at  German  control. 

Holland  realizes  that  with  her  colonial  possessions 
she  can  play  an  important  part  in  the  fierce  struggle 
for  raw  materials,  which  will  be  the  vital  phase  of  the 
war  after  the  war.  These  colonies  produce  tea,  coffee, 
rubber,  sugar,  copra,  quinine  and  oil.  With  such 
products  she  can  dicker  for  coal,  steel  and  machinery. 
Thus  the  Dutch  East  Indies  could  become  a  sort  of 
economic  complement  to  the  United  States.  The  ship- 
ping seizure  led  to  direct  communication  between 
Java  and  the  United  States.  It  will  only  need  speed- 
ing up  with  peace. 


IV — Switzerland  the  Buffer  State 


ONE  afternoon  just  before  the  armistice  was 
signed  I  sat  in  tlie  tea-room  of  a  well-known 
hotel  at  Geneva  that  did  not  need  the  influx  of 
wartime  spies,  agents  and  propagandists  to  make  it  a 
notorious  nest  of  intrigue.  It  was  a  babel  of  tongues 
no  less  conflicting  than  the  interests  represented.  My 
companion  was  an  Englishman,  long  a  resident  of 
Switzerland,  who  knew  the  diplomatic  ropes  as  well  as 
any  person  in  the  country.  We  had  been  talking  about 
Germany  after  the  war. 

Suddenly  he  turned  and  said  :  "Within  a  year  after 
the  Peace  Treaty  is  signed  there  will  be  at  least  five 
million  new  Swiss  citizens  in  Europe." 

"What  do  you  mean?"  I  asked. 

"The  German  as  a  German  will  not  be  admitted  to 
the  Trade  Councils  for  years  after  the  war,  and  he  will 
therefore  have  to  become  a  neutral  to  break  in,"  was 
the  reply. 

I  had  just  spent  a  fortnight  in  Switzerland  watch- 
ing the  German  make  his  last  desperate  play  before  the 
Inevitable  collapse.  I  realized  that  my  friend  had 
stated  a  truth  big  with  significance  for  the  vast  social 
and  economic  reconstruction  that  will  be  he  universal 

144 


SWITZERLAND  THE  BUFFER  STATE   145 

task  for  many  months  to  come.  In  no  other  land,  not 
even  Holland,  has  the  German  played  his  game  of 
commercial  penetration  so  consistently  and  so  cun- 
ningly as  in  the  tiny  republic  bulwarked  by  the  Alps, 
and  which  has  been  the  haven  of  the  oppressed  for 
centuries.  The  Germans  made  it  for  the  first  time 
the  stamping  ground  of  the  oppressor,  who  wielded 
the  weapon  of  economic  necessity  instead  of  the 
mailed  fist. 

During  the  four  years  of  war  the  lot  of  the  small 
neutrals,  notably  those  that  bordered  on  Germany, 
was  not  a  happy  one.  Just  as  America  paid  a  high 
price  to  ascertain  the  meaning  of  the  word  neutrality 
so  did  these  countries  discover  all  the  terrors  of  war 
without  actual  participation.  They  were  caught  be- 
tween a  ravening  and  rapacious  Germany  on  the  one 
hand  and  an  indignant  and  outraged  group  of  Allies 
on  the  other.  The  wartime  Holland,  literally  between 
the  devil  and  the  deep  blue  sea,  was  full  mate  in 
trouble  to  the  Switzerland,  walking  on  eggs.  Each 
was  a  sort  of  nonbelligerent  No  Man's  Land  swept  by 
a  cross  fire  of  equally  cross  purposes. 

Now  that  the  war  is  over  the  complications  of  these 
small  neutrals  do  not  end.  In  some  respects  they  are 
only  beginning  anew.  The  acute  self-interest  of  the 
victorious  European  Powers  as  revealed  by  the  peace 
negotiations  at  Paris  indicates  that  the  economic  strug- 
gle for  existence,  which  will  vie  with  a  freed  democ- 
racy as  the  principal  by-product  of  the  conflict,  will 
affect  the  neutrals  for  years  to  come.  Fate  has  de- 
creed :  Once  a  neutral,  always  a  neutral.     Hence  any 


146  PEACE  AND  BUSINESS 

intimate  study  of  conditions  and  prospects  in  the  non- 
warring  lands  is  of  supreme  interest  and  importance. 

Run  the  whole  range  of  European  neutrals  and  you 
get  a  panorama  of  German  economic  intrigue  that  un- 
folds with  the  romantic  and  sometimes  sinister  fasci- 
nation of  a  cinema  shocker.  Spain  and  Sweden  head- 
ed the  hst  of  these  German  colonies.  Here  the  Ger- 
man conquest  was  easy  because  frank  admiration  of 
the  exaggerated  Teutonic  might — evidenced  wherever 
you  turned — was  a  first  aid  to  propaganda  and  pene- 
tration. Spain,  however,  was  too  far  off  to  be  im- 
mediately useful  for  war  purposes.  Her  period  of 
service  begins  now.  The  main  efforts  were  concen- 
trated on  Holland,  who  had  tonnage  and  accessibility 
to  the  sea,  and  Switzerland  with  her  geographical  and 
political  leverage.  They  became  and  will  remain  the 
economic  buffer  states. 

Though  small  in  area,  light  in  population,  and  rais- 
ing but  a  wee  voice  in  the  concert  of  the  world  powers 
that  be,  they  will  be  pivotal  points  in  the  whole  Ger- 
man after-the-war  commercial  strategy.  Just  as  they 
bore  careful  watching  during  the  war,  so  must  they 
be  the  objects  of  a  particular  scrutiny  henceforth. 
Why?  Simply  because  the  whole  German  possibility 
of  come-back  is  based  on  her  ability  to  use  these  neu- 
tral countries  for  her  own  selfish  ends.  The  German 
program  of  business  restoration  is  partly  based  upon 
an  intensive  camouflage  campaign  in  Holland  and 
Switzerland. 

I  visited  Switzerland  at  a  critical  time.  The  Kaiser 
was  about  to  pass  into  eclipse,  and  with  him  the  myth 


SWITZERLAND  THE  BUFFER  STATE      147 

of  Germanic  power.  I  saw  Germans  everywhere;  heard 
their  language  spoken  on  all  sides;  again  and  again  I 
stood  on  the  banks  of  the  Rhine  and  looked  over 
into  that  land  of  the  deepening  shadow.  In  some  re- 
spects it  was  like  being  in  Germany  itself.  The  solici- 
tude of  the  German  spies  for  my  baggage  and  more 
especially  the  papers  that  it  contained,  continued. 
Those  Swiss  who  had  backed  the  wrong  horse  in  the 
early  days  of  the  war  were  piling  up  on  the  band- 
wagon of  the  winners. 

At  Berne,  for  example,  a  German  secret-service 
agent  masquerading  as  head  waiter  in  a  leading  hotel 
leaned  over  me  as  he  served  my  luncheon  and  said: 
"At  last  we've  got  them,  sir." 

There  was  humor  as  well  as  significance  in  the  swift 
turn-around  of  the  rats  who  scuttled  fast  from  the 
sinking  ship. 

Before  we  make  our  little  journey  through  Switzer- 
land it  may  be  well  to  inventory  the  complications  and 
difficulties  that  beset  her  the  moment  that  the  red  tides 
were  loosed  in  Europe.  Holland  had  nothing  on  her. 
In  the  first  place  Switzerland  is  not  one  country. 
She  is  realy  three  different  nations — French,  German 
and  Italian.  Out  of  a  total  population  of  4,000,000 
nearly  800,000  are  French-Swiss  and  speak  the  lan- 
guage of  France.  Within  her  confines  dwell  300,000 
Germans  who  speak,  think  and  act  German.  There 
are  80,000  in  Zurich  alone.  These  300,000  do  not 
include  the  German-speaking  and  German-sympathiz- 
ing population  that  inhabits  the  northern  section  bor- 
dering on  Germany  and  Austria.     The  French-Swiss 


148  PEACE  AND  BUSINESS 

were  as  loyal  to  France  as  the  German-Swiss  were 
to  Germany,  and  the  Italian-Swiss  to  Italy.  This  orig- 
inal melting  pot — it  was  the  sanctuary  of  Calvin, 
Knox  and  Marx  long  before  New  York  became  the 
universal  gateway — therefore,  became  a  seething  caul- 
dron of  unrest,  dissension  and  clashing  interests. 

But  this  was  not  all.  Prior  to  the  war  the  Germans 
had  picked  out  Switzerland  as  their  particular  target 
of  penetration,  expecting  her  to  be,  like  Holland,  a 
useful  tool  in  the  scheme  of  world  annexation.  She 
was  and  will  continue  to  be,  the  chief  intermediary  on 
the  trade  highway  between  Germany  and  Italy.  Like- 
wise she  provided  the  chief  Teutonic  underground 
railway  into  France.  The  important  fact  for  all  of 
us  to  remember  now  is  that  Switzerland,  so  far  as 
Germany  is  concerned,  will  remain  the  same  Switzer- 
land, offering  the  same  opportunities  for  exploitation 
and  all  those  other  pernicious  activities  that  are  so 
inseparably  a  part  of  the  German  game  in  peace  as 
well  as  in  war. 

Switzerland  was  able  to  put  up  with  all  this  before 
the  war — first,  because  it  was  profitable,  which  is  the 
usual  reason  for  most  things ;  second,  because  the  Ger- 
man hand  was  not  disclosed.  The  moment  that  hos- 
tilities began  the  German  showed  his  teeth  and  be- 
came the  bully  whose  favorite  sport  was  to  browbeat 
and  intimidate  the  small  neutral.  Switzerland's 
troubles  began.  In  appraising  them  you  find  a  curious 
parallel  with  Holland,  whose  anxieties  were  almost 
identical.  Both  countries  were  physically  bang  up 
against  Germany  and   full  of  imperial  well-wishers. 


SWITZERLAND  THE  BUFFER  STATE      [49 

Both  countries  depended  in  the  main  upon  Germany 
for  coal  and  iron.  Strange  as  it  may  seem,  Switzerland, 
perhaps  the  richest  country  in  the  world  per  capita  and 
with  an  intensive  industrial  development,  is  absolutely 
without  mineral  resources.  Practically  all  her  raw 
materials  are  imported. 

The  principal  wartime  kinship,  however — and  it 
likewise  spelled  an  acute  wartime  necessity — between 
Holland  and  Switzerland  lay  in  the  fact  that  their 
food  supplies,  like  those  raw  materials,  had  to  come 
from  the  outside.  Holland,  hemmed  in  by  the  block- 
ade and  the  still  greater  menace  of  the  German  sub- 
marine, was  no  more  aloof,  so  far  as  the  bread  basket 
was  concerned,  than  little  Switzerland,  hemmed  in  by 
four  belligerent  countries.  It  was  a  predicament  and 
a  hardship  without  parallel, 

Holland  had  ships  and  rich  colonies,  and  by  some 
means  was  able  to  get  grain.  Switzerland  had  no 
merchant  fleets;  the  ships  of  the  Allies,  who  wanted 
to  befriend  her,  were  busy  with  their  own  needs ;  and 
the  railway  systems  of  France  and  subsequently  those 
of  Italy  were  taxed  to  the  limit  to  supply  their  Armies. 

With  a  brutality  that  she  regarded  as  a  divine  pre- 
rogative Germany  at  once  capitalized  the  needs  of 
these  two  neutrals.  For  coal  and  iron  she  exacted 
foodstuffs.  With  her  usual  philanthropy  she  increased 
the  price  of  coal  from  the  pre-war  price  of  five  dollars 
a  ton  to  eighteen  dollars  a  ton  and  subsequently  to 
thirty-two  dollars  a  ton.  Despite  this  Shylockian  per- 
formance she  demanded  compensations  in  the  shape  of 
immense  quantities  of  chocolate,   cheese  and   other 


150  PEACE  AND  BUSINESS 

focdstuffs.  The  irony  and  hardship  of  the  situation 
reached  the  point  that  just  as  I  found  it  impossible 
to  get  Edam  cheese  in  Edam  so  was  it  equally  difficult 
to  get  Swiss  cheese  in  Switzerland !  Wherever  you 
saw  a  Swiss  cheese  factory  you  also  saw  a  string  of 
German  freight  cars  outside  ready  to  be  loaded. 

If  the  United  States,  playing  her  great  war  role  of 
general  provider,  had  not  rationed  Switzerland  with 
grain  in  a  critical  hour  by  diverting  ships  from  war 
use  to  this  humanitarian  service  the  Swiss  would  have 
faced  actual  starvation.  Incredible  as  it  may  seem, 
the  Germans  not  only  torpedoed  one  of  these  ships 
but  subsequently  accused  the  Swiss  of  disloyalty  be- 
cause they  accepted  the  American  help.  The  Teutonic 
war  mind — like  its  war  machine — worked  in  a  myster- 
ious way  its  blunders  to  perform. 

Remember  too  that  over  the  unhappy  head  of  Switz- 
erland, as  over  the  head  of  Holland,  there  trembled 
always  the  menace  of  an  armed  German  invasion. 
With  all  other  ways  blocked  it  would  have  given  the 
Kaiser  a  road  into  France.  Switzerland's  neutrality, 
to  be  sure,  had  been  guaranteed  by  the  Congress  of 
Vienna  in  1815.  But  Belgium's  inviolability  had  also 
been  guaranteed,  and  part  of  the  country  made  into  a 
shambles.  It  was  this  fear  of  being  a  second  Bel- 
gium that  made  Holland  do  many  things  for  Ger- 
many that  she  did  not  want  to  do.  In  the  last  analy- 
sis it  was  the  same  dread  that  caused  Switzerland  to 
bend  so  often  to  the  Teutonic  will,  regardless  of  price. 
Switzerland,  "the  Good  Samaritan  of  the  world,"  was 


SWITZERLAND  THE  BUFFER  STATE      151 

literally  treated  like  the  devil  incarnate  by  the  empire 
she  had  succored  and  befriended  so  often. 

The  outstanding  features  in  the  Swiss  situation  that 
vitally  concern  us  are  embodied  in  the  answers  to  these 
questions :  How  did  Germany  use  Switzerland  for 
her  economic  ends?  What  was  the  system?  How 
will  it  operate  in  the  future? 

To  get  the  whole  story  we  must  go  back  for  a 
moment  to  the  period  just  before  the  war.  In  Switz- 
erland as  in  no  other  country  in  the  world  Germany 
was  ideally  intrenched  so  far  as  her  purposes  were 
concerned.  Not  only  was  over  a  third  of  the  country 
pro-German  and  German-speaking,  but  everywhere  the 
vast  and  now  familiar  system  of  propaganda  was  at 
work.  That  system  was  part  of  the  economic  pene- 
tration program.  It  was  a  hydra-headed  reptile  that 
never  slept.  German  tourists  swarmed  the  hotels,  Ger- 
man bankers  had  their  grip  on  Swiss  capital  and  em- 
ployed it  in  the  usual  promotion  of  German  schemes; 
German  professors  packed  the  Swiss  universities,  not 
to  complete  their  academic  education  but  to  plant  the 
poison  of  German  ideas.  One  particular  German 
stronghold  was  the  Swiss  banks.  Most  of  them  had 
German  directors;  many  were  German  through  and 
through.  Zurich  and  Basel  were  in  reality  a  minia- 
ture Berlin  and  Munich  in  their  social  and  commer- 
cial structure. 

When  the  war  broke,  northern  Switzerland,  if  you 
judged  by  the  emotion  and  enthusiasm  of  the  people, 
was  as  keenly  roused  and  concerned  as  Germany  her- 
self.    With  the  first  gun  Germany  got  busy.     The 


152  PEACE  AND  BUSINESS 

first  thing  was  to  Impress  Switzerland  with  the  idea 
that  it  would  be  a  short  and  easy  triumph  and  that, 
to  quote  one  of  the  injunctions,  "If  Switzerland  does 
not  behave  she  will  get  a  dose  of  Belgium."  Those 
early  German  victories  made  a  strong  impression, 
which  the  Germans  used  to  full  advantage.  The  pene- 
tration increased.    Switzerland  reeked  with  espionage. 

At  once  Germany  showed  a  certain  amount  of  eco- 
nomic foresight.  Despite  her  long  preparation  for 
war  she  realized  that  with  the  tightening  of  the  British 
blockade  she  would  sooner  or  later  face  the  problem 
of  raw  materials.  She  started  out  to  cajole  or  coerce 
Switzerland  into  acting  as  her  handyman.  Being  hu- 
man and  pro-Swiss  above  all  other  things  the  average 
Swiss  merchant  was  not  averse  to  being  persuaded. 
A  flood  of  food  and  materials  began  to  stream  into 
Germany.  Later  when  Germany  got  up  against  it 
the  Swiss  realized  their  folly  and  paid  for  it  with  many 
pounds  of  flesh. 

The  whole  German  program  developed  three 
phases :  One  was  the  accumulation  of  raw  materials 
either  for  use  during  the  war  or  for  reconstruction; 
the  second  lay  in  the  foundations  laid  down  for  future 
trade  with  the  world ;  third  was  the  crusade  launched 
to  justify  the  war  and  establish  a  moral  rehabilitation 
after  the  war.    We  will  take  them  up  in  order. 

With  hostilities  Germany  launched  a  huge  buying 
campaign.  It  was  in  charge  of  Herr  Hauptmann 
Schmitz,  who  acted  as  chief  purchaser  and  was  at- 
tached to  the  German  Legation  at  Berne.  He  had 
agents  everywhere.     The  great  object  was  to  corner 


SWITZERLAND  THE  BUFFER  STATE      153 

all  the  available  cotton,  wool,  rubber,  copper,  nickel 
and  foodstuffs.  Price  was  no  object.  The  goods 
were  bought  in  the  open  market.  Everything  looked 
rosy. 

This  was  only  so  long  as  the  war  looked  as  if  it 
might  be  over  in  a  year.  When  the  Germans  re- 
ceived their  first  setback  and  the  new  British  Armies 
poured  into  France  this  purchasing  machine  got  a 
puncture.  The  Allies  began  to  suspect  the  Swiss  of 
excessive  zeal  in  providing  the  Germans  with  mate- 
rials, especially  cotton,  which  was  useful  for  war  pur- 
poses.    The  edict,  "No  more  cotton,"  went  forth. 

A  great  protest  went  up  in  Switzerland.  "A  large 
part  of  our  industrial  life  depends  upon  cotton.  If 
we  do  not  get  it  we  shall  perish,"  was  the  plea. 

"All  right,"  said  the  Allies.  "We  will  let  you  have 
cotton,  but  you  will  be  rationed.  You  will  be  per- 
mitted to  sell  Germany  only  a  limited  amount  of  man- 
ufactured goods — enough  to  keep  your  industries  go- 
ing." 

In  Switzerland,  as  in  Holland,  there  were  "good" 
and  "bad"  business  men.  The  "good"  disliked  Ger- 
many and  refused  to  sell  her  goods  or  materials;  the 
"bad"  imported  merchandise  from  the  Allies  under 
many  pretenses  and  slipped  it  through  to  the  enemies 
of  mankind.  Everything  was  grist  to  their  money 
mills.  This  smuggling,  which  developed  into  a  tre- 
mendous business,  had  to  be  stopped  because  it  was 
becoming  a  national  crime. 

Now  was  bom  one  of  the  most  picturesque  business 
institutions  produced  by  the  war,  and  it  is  still  going 


154  PEACE  AND  BUSINESS 

strong.  It  was  the  Societe  Suisse  de  Surveillance 
ficonomique,  or  the  "S.  S.  S.,"  as  it  is  better  known. 
In  scope  and  organization  it  was  precisely  like  the 
famous  Netherlands  Overseas  Trust.  It  was  a  group 
of  Swiss  business  men  organized  to  secure  and  dis- 
tribute all  imports  with  the  guaranty  that  they  were 
not  to  be  diverted  into  enemy  countries.  The  follow- 
up  was  not  quite  so  rigid  as  in  Holland,  where  a  re- 
markable progressive  secret  service  follows  the  mate- 
rial or  the  commodity  to  the  ultimate  consumer.  The 
Swiss  system  likewise  differed  from  the  Dutch  in  that 
raw  materials  in  particular  were  not  consigned  to  in- 
dividuals but  to  various  syndicates.  Altogether  there 
were  fifty-one  of  these  miniature  trusts.  Each  one 
was  rationed. 

Let  me  illustrate  with  the  case  of  Syndicat  dTm- 
portation  de  ITndustrie  Metallurgique  Suisse,  or  the 
"S.  I,  M.  S.,"  as  it  is  called  for  short.  This  was  the 
importing  syndicate  of  the  Swiss  metallurgical  indus- 
try and  it  comprises  3600  members.  It  was  likewise 
the  metal  controller  of  the  country;  it  imported  all 
metals  and  allocated  the  amounts  to  the  various  indi- 
vidual manufacturers.  No  one  could  get  raw  metals 
save  through  its  offices.  The  basis  of  supply,  I  might 
add,  for  all  imports  of  the  S.S.S.  was  the  importation 
of  the  three  years  immediately  preceding  the  war. 

In  these  syndicates,  which  extended  to  every  branch 
of  industry  in  Switzerland,  you  got  one  of  the  many 
business  compensations  of  the  war.  Never  before  has 
the  value  of  cooperation  been  so  emphasized.  In  both 
neutral  and  belligerent  countries  control  has  become 


SWITZERLAND  THE  BUFFER  STATE   155 

a  habit.  It  has  impressed  lessons  of  economy  and  co- 
ordination that  will  be  felt  throughout  all  the  succeed- 
ing generations.  Of  course  the  syndicate  or  large  co- 
operative idea  is  not  especially  new  in  Switzerland. 
Every  city  has  its  group  of  trusts  of  one  kind  or  an- 
other. At  Berne,  for  example,  they  own  or  operate 
nearly  everything.  The  leading  variety  theater  and 
dance  hall  in  the  capital  is  the  property  of  a  coopera- 
tive society  composed  of  stolid  burghers ! 

The  S.S.S.  merely  expressed  this  old  Swiss  coop- 
erative idea  with  fangs.  It  restricted  Swiss  economic 
liberty  and  action,  but  through  its  guaranty  of  good 
faith  to  the  Allies  it  enabled  the  little  republic  to  get 
a  working  quantity  of  raw  materials  and  foodstuffs, 
and  these  in  turn  kept  the  factory  wheels  of  the  na- 
tion turning. 

At  the  head  of  the  S.S.S.  was  H.  Grobet-Roussy, 
a  self-made  Swiss  industrial  leader — he  began  as  a 
maker  of  files — who,  with  his  group  of  associates,  has 
loyally  maintained  the  integrity  of  the  society's  obli- 
gations to  the  Allies. 

Before  I  leave  the  S.S.S.  it  is  interesting  to  state 
that,  not  to  be  outdone  by  the  Allies — and  being  the 
world's  prize  imitators — the  Germans  organized  a  sim- 
ilar institution  to  prevent  any  articles  or  materials  ex- 
ported from  Germany  into  Switzerland  from  being  re- 
exported into  Allied  countries.  There  was  little 
provocation  for  this  procedure,  for  the  simple  reason 
that  with  the  rape  of  Belgium  the  ban  on  German 
goods  started  in  Allied  Europe.  Beginning  with  191 5 
the  great  bulk  of  German  goods  exported  into  neutral 


156  PEACE  AND  BUSINESS 

countries  was  for  propaganda  purposes  only.  But 
this  is  a  later  story. 

Coincident  with  this  ban  came  Germany's  studied 
campaign  of  annoyance  to  the  Allied  interests  in 
Switzerland.  One  incident  will  show  how  it  worked. 
France,  like  England,  was  unprepared  for  war.  She 
had  to  have  ammunition  and  she  ordered  it  wherever 
it  was  possible  to  get  it.  The  Swiss  watchmakers  are 
the  best  fuse  manufacturers  in  the  world.  They  were 
not  averse  to  making  the  enormous  profits  that  war 
expediency  suddenly  created.  The  result  was  that  the 
French  gave  orders  to  various  factories.  Germany 
determined  to  block  this  game  in  the  future.  She 
hastily  placed  orders  for  shells  with  the  remaining 
Swiss  concerns.  She  had  no  idea  of  using  the  shells. 
Her  purpose  was  to  queer  these  factories  with  the  Al- 
lies. She  knew  perfectly  well  that  just  as  soon  as  a 
Swiss  factory  accepted  an  order  for  German  shells, 
which  meant  that  it  did  business  with  the  enemy,  it 
was  put  on  the  Allied  black  list.  Germany  went  fur- 
ther. Almost  without  exception  she  canceled  these 
contracts  almost  as  soon  as  they  were  put  into  work, 
which  practically  left  the  Swiss  manufacturer  high 
and  dry.  He  was  not  only  in  bad  with  the  Allies, 
who  would  have  renewed  their  orders  continually  un- 
til the  end  of  the  war,  but  he  found  himself  in  some 
instances  with  idle  machinery  and  a  burden  of  ill  will 
that  was  a  distinct  liability.  The  German  was  any- 
thing but  an  altruist. 

The  organization  of  the  S.S.S.  put  a  stop  to  a  great 
deal  of  open  German  buying  in  Switzerland.     Ger- 


SWITZERLAND  THE  BUFFER  STATE   157 

many  had  to  have  the  stuff;  she  could  not  get  it  by 
fair  means  so  she  adopted  foul,  which  was  no  great 
strain  on  her  conscience.  This  leads  us  to  the  Ger- 
man economic  preparation  for  the  future  in  Switzer- 
land, which  bears  directly  on  the  present  hour,  when 
the  world  is  wondering  what  she  is  going  to  do  for 
raw  materials. 

Though  Germany  began  to  buy  enormously  the  mo- 
ment that  the  war  began,  it  must  be  said  to  the  credit 
of  the  Swiss  that  before  a  year  passed  they  officially 
put  a  stop  to  the  unrestricted  movement  of  these  ma- 
terials into  the  empire.  The  Germans  kept  on  buy- 
fng,  and  this  means  that  their  immense  hoards  began 
to  pile  up.  Warehouse  after  warehouse  became 
packed  to  the  roof  with  cotton  and  wool. 

By  every  art  known  to  diplomatic  trickery  Germany 
sought  to  release  these  stores,  which  as  the  war 
dragged  on  and  the  blockade  pressed  became  more  and 
more  necessary  to  the  economic  and  war  life  of  the 
Fatherland.  The  value  that  Germany  placed  on  these 
materials,  even  as  far  back  as  19 16,  is  best  expressed 
in  the  official  circular  issued  by  Michaelis,  Minister 
of  War,  and  transmitted  to  the  imperial  German  pur- 
chasing agent  at  Berne.  The  document  in  full  was  as 
follows : 

"MINISTRY  OF  WAR 

"Berlin  W  66  den  12,  11,  1916, 

"Leipzigerstrasse   5. 
"In  the  negotiations  with  the  Swiss  Government  the 
permit  for  the  exportation  of  the  German-owned  yarns 
and  cloths  was  not  accomplished.     Nevertheless  in  the 


158  PEACE  AND  BUSINESS 

trade  agreement  of  September  29,  1916,  the  assurance 
of  the  Swiss  Government  was  given  that  such  German 
property  would  not  be  requisitioned,  commandeered 
or  in  any  way  taken  by  force,  and  at  the  cessation  of 
hostihties  it  is  forthwith  to  be  released. 

"Due  to  this  state  of  facts  the  War  Office  suggest 
to  you  that  you  hold  your  yarns  and  cloths  now  stored 
in  Switzerland  until  the  end  of  the  war  or  to  sell  the 
same  in  Switzerland.  The  first  might  be  preferably 
recommended  in  the  interest  of  the  promotion  of  the 
trade  which  is  to  be  set  going  again  after  the  war. 
However,  a  preparation  or  reworking  into  clothes  for 
export  might  come  into  consideration.  But  if  for  pe- 
culiar reasons  a  sale  must  be  effected,  the  representa- 
tion of  the  War  Office  of  the  Ministry  of  War  in 
Berne  is  authorized,  if  the  owner  so  desires,  to  aid 
in  such  sales  in  order  to  guard  against  the  possibility 
that  the  prices  be  lowered  by  sudden  and  urgent  offer 
and  the  owners  thereby  suffer  loss.  The  War  Office 
of  the  Ministry  of  War  makes  no  special  charge  for 
this. 

*Tn  case  you  are  inclined  to  make  use  of  this  sug- 
gestion it  is  requested  that  you  make  a  statement  of 
the  price  limit  at  w^hich  you  desire  to  sell  your  goods 
and  it  will  be  endeavored  to  secure  for  you  the  best 
possible  offers;  but  it  is  called  to  your  attention  that 
according  to  the  enactment  of  September  thirtieth  by 
the  Bundesrat  a  fixing  of  the  highest  price  limit  for 
inland  trade  is  anticipated  for  cotton  cloth  and  cotton 
yarn ;  what  this  limit  will  be  is  until  now  not  known. 

"The  storage  certificates  to  be  had  in  Berne  and  the 
appropriate  authorities  are  at  your  disposition.  Should 
you  prefer  to  continue  to  hold  your  goods  it  is  recom- 
mended that  you  report  same  in  Berne  in  order  that 
the  goods  may  in  every  case  be  designated  to  the  Swiss 
Government  as  German  property. 


SWITZERLAND  THE  BUFFER  STATE      159 

"Yarns  in  any  number  are  no  longer  to  be  exported. 
"By  order  of 

"[Sig.]       MiCHAELTS." 

I  reproduce  this  circular  for  various  reasons.  One 
is  to  show  that  the  immense  amount  of  raw  materials 
piled  up  in  Switzerland  is  for  the  after-the-war  re- 
construction. Another  is  to  indicate  the  cunning  of 
the  German  mind.  In  the  first  paragraph  appears  the 
phrase  "at  the  cessation  of  hostilities  it  is  forthwith 
to  be  released."  The  Germans  construed  this  to  mean 
that  they  could  get  the  stuff  as  soon  as  the  armistice 
was  signed.  The  pro-Ally  feeling  in  Switzerland  was 
that  it  meant  the  signing  of  the  Peace  Treaty,  and  it 
did. 

You  get  some  idea  of  the  extent  of  German  buying 
in  Switzerland  when  I  say  that  the  accumulated  stores 
are  valued  at  nearly  two  hundred  and  fifty  million  dol- 
lars. Very  little  of  it  was  bought  openly  during  the 
past  two  years.  The  Germans  had  their  stool  pigeons 
in  the  shape  of  Swiss,  Austrian,  Polish  or  Dutch  buy- 
ers, who  not  only  bought  the  material  in  the  names  of 
firms  in  Switzerland,  Holland  and  Sweden  but  who 
resorted  to  every  possible  expedient  to  annex  mate- 
rial for  the  Germans. 

These  buyers  were  called  "Schiebers."  Their  pock- 
ets were  lined  with  German  money  and  they  bought 
right  and  left;  and  sometimes  in  mystifying  fashion, 
as  this  incident  will  show: 

In  a  certain  prosperous  Swiss  town  a  merchant  had 
ten  thousand  francs'  worth  of  women's  blouses.    One 


i6o  PEACE  AND  BUSINESS 

of  these  Austrian  Schiebers  came  in  and  said:  "I 
hear  you  have  some  blouses  to  sell." 

"Yes,"  was  the  reply. 

"What  do  you  want  for  them  ?" 

The  shopkeeper,  who  had  no  desire  to  sell  them,  re- 
plied :    "I'll  take  twenty-five  thousand  francs." 

"All  right,"  replied  the  buyer.     "I'll  buy  them." 

The  shopkeeper  protested  that  he  could  not  deliver 
them,  whereupon  the  buyer  said:  "All  I  want  is  a 
receipt.     I'll  send  for  them  after  the  war." 

The  significance  of  the  episode  was  simply  this: 
The  Austrian  was  buying  for  a  German  house  that 
wanted  to  have  an  available  stock  immediately  after 
peace.  It  is  a  typical  revelation  of  the  German  hand 
in  Switzerland. 

Despite  the  fact  that  it  was  legally  impossible  to 
get  the  raw  materials  into  Germany  the  Germans 
looked  ahead  to  the  moment  that  peace  would  release 
the  Teutonic  industry,  and  the  great  new  world-trade 
competition  would  begin.  Stores  of  the  material  seg- 
regated in  Switzerland  will  be  used  during  the  next 
year  in  the  German-owned  factories  in  Switzerland. 
As  I  have  pointed  out  on  more  than  one  occasion,  the 
mark,  "Made  in  Germany,"  which  for  a  time  will  be 
the  brand  of  a  commercial  Cain,  will  be  succeeded  by 
the  stamp,  "Made  in  Switzerland" — if  the  Germans 
can  get  away  with  it.  A  neat  little  scheme  is  being 
framed  up  in  Switzerland,  however,  to  frustrate  this 
camouflage,  as  you  shall  presently  see. 

Meanwhile  we  can  turn  to  what  is  in  many  respects 
one  of  the  most  picturesque  and  remarkable  evidences 


SWITZERLAND  THE  BUFFER  STATE      i6i 

of  German  commercial  subterfuge  that  the  war  re- 
vealed. In  all  my  four  years'  study  of  the  methods  by 
which  the  Germans  obtained  material  for  war  pur- 
poses I  have  yet  to  discover  an  episode  that  ranks  with 
this  In  ingenuity  and  daring. 

To  get  the  setting  we  must  go  to  the  little  Swiss 
city  of  St.  Gall,  which  is  the  center  of  the  embroidery 
industry  of  the  world.  In  peacetime  its  annual  ex- 
ports amount  to  more  than  forty  million  dollars,  of 
which  a  third  comes  to  us.  At  St.  Gall  you  get  the 
one  real  evidence  of  America  in  Switzerland,  for  the 
reason  that  twenty  million  dollars  of  American  cap- 
ital Is  Invested  in  her  embroidery  factories.  As  you 
walk  down  the  streets  you  can  see  the  names  of  New 
York  houses  on  the  walls  and  windows.  In  the  com- 
fortable business  men's  club — one  of  the  best  in 
Switzerland — ^you  can  hear  American  talk  to  your  ear's 
content. 

Since  St.  Gall's  activity  depends  almost  entirely 
upon  cotton  the  war  interfered  with  the  even  tenor 
of  her  productive  way.  Export  limitations  added  to 
her  troubles.  One  of  the  first  restrictions  prohibited 
the  export  of  plain  cotton  cloths  Into  Germany.  The 
reason  was  that  plain  cotton  cloth  could  be  easily  used 
for  war  work,  and  more  especially  In  the  manufacture 
of  Zeppelins.  The  only  cotton  goods  that  could  be 
sent  Into  any  of  the  Central  Powers  had  to  be  em- 
broidered. Keep  this  fact  in  mind  because  it  bears 
directly  on  the  point  of  the  story  I  am  now  to  unfold. 

For  years  there  had  been  a  moderate  manufacture 
in  St.  Gall  of  an  article  of  feminine  underwear  which 


i62  PEACE  AND  BUSINESS 

we  will  call  the  X  shirt.  In  that  mysterious  phrase- 
ology, which  is  a  dead  letter  to  most  unmarried  men, 
it  is  technically  called  a  combination.  In  the  ordinary 
course  of  underwear  events — and  because  the  skirt 
must  be  short — it  never  measures  more  than  three  feet 
in  length.  At  the  top  of  the  garment  there  is  usually 
an  embroidered  design  of  some  kind.  Knowing  these 
facts  you  can  proceed  to  the  plot  now  to  be  unfolded. 

Just  as  soon  as  the  embargo  was  clamped  down  on 
the  export  of  plain  cotton  goods  into  the  enemy  coun- 
tries an  activity  in  X  shirts  suddenly  developed.  Dur- 
ing the  first  quarter  of  19 17  more  than  three  hun- 
dred thousand  pounds  of  these  shirts  went  across  the 
frontier  into  Germany.  This  was  not  surprising. 
Everybody  knew  that  the  consumption  of  goods  in  the 
empire,  due  to  war  needs,  had  been  great.  No  one 
paid  particular  attention  to  the  steady  stream  of  boxes 
that  went  out  of  St.  Gall,  all  filled  with  these  shirts. 

All  goods  from  Switzerland  into  Germany  are  sub- 
ject to  a  customs  examination.  When  these  cases  of 
X  shirts  began  to  come  along  in  constantly  increasing 
numbers  the  Swiss  border  authorities  perfunctorily 
opened  a  box,  saw  that  it  contained  underwear  with 
embroidei-y  at  the  top — which  met  the  wartime  re- 
quirement— and  passed  on  the  whole  lot  without  any 
further  investigation.  As  the  flood  of  X  shirts  in- 
creased one  Swiss  customs  officer,  more  conscientious 
than  his  mates,  began  to  smell  a  mouse.  He  said  to 
himself:  "These  German  women  who  are  complain- 
ing about  the  pinch  of  war  are  certainly  using  up  a 


SWITZERLAND  THE  BUFFER  STATE   163 

great  many  pieces  of  embroidered  underwear.  What 
is  the  meaning  of  this  sudden  fashion  in  X  shirts?" 

When  the  next  batch  came  along  he  decided  to  make 
a  real  examination.  The  shirt  on  the  top  was  made 
according  to  regulation  size.  It  was  neatly  folded  and 
was  the  usual  plant  for  the  unsuspecting  customs  offi- 
cer. When  the  vigilant  official  dug  down  into  the 
case  he  discovered  that  every  shirt  was  exactly  twen- 
ty-five feet  long !  Even  the  giants  that  our  old  friend 
Gulliver  found  in  his  travels  could  not  have  worn 
them.  Every  other  case  in  this  consignment  was  filled 
with  these  same  fantastic  garments.  As  a  result  of 
this  amazing  deception  Germany  got  more  than  two 
million  yards  of  cotton  cloth  for  her  war  work  every 
month. 

Now  the  particular  reason  for  this  performance  was 
that  Friedrichshafen,  the  center  of  Zeppelin  manufac- 
ture, is  on  the  shores  of  Lake  Constance,  which  is  only 
a  few  miles  from  St.  Gall.  A  hundred  thousand  yards 
of  cloth  was  needed  for  every  Zeppelin.  Thus 
through  the  device  of  manufacturing  what  purported 
to  be  X  shirts,  the  material  for  twenty  Zeppelins  was 
smuggled  into  Germany  every  thirty  days.  I  need 
scarcely  add  that  the  moment  the  fraud  was  bared  the 
German  supply  of  cotton  cloth  suddenly  decreased. 
The  Swiss  restricted  the  length  of  X  shirts  to  eighty 
centimeters,  and  one  picturesque  system  of  smuggling 
came  to  an  end. 


i64  PEACE  AND  BUSINESS 


II 

This  extraordinary  episode — and  it  represented 
merely  one  kind  of  smuggling  that  went  on  between 
Switzerland  and  Germany — was  made  possible,  first, 
by  the  cupidity  which  knows  neither  rank  nor  cause; 
second,  by  the  war-born  German  industrial  enterprise 
planted  throughout  Switzerland  as  the  corner-stone  of 
a  new  world  trade.  Here  we  reach  the  crux  of  the 
whole  German  economic  penetration,  which  is  to-day 
one  of  the  principal  assets  of  the  defeated  empire  now 
struggling  for  rehabilitation. 

We  can  get  a  concrete  manifestation  of  It  without 
leaving  the  domain  of  the  X  shirt.  Before  the  war 
St.  Gall's  only  rival,  both  in  the  manufacture  of  em- 
broidery machines  and  in  embroidery  output,  was  the 
German  town  of  Plauen.  Just  as  soon  as  the  war 
broke,  her  industry  ceased,  because  practically  all  the 
cotton  stocks  in  Germany  were  commandeered  for  ac- 
tual war  needs.  Plauen  did  not  sit  with  folded  hands 
bemoaning  the  loss  of  her  principal  business.  She  did 
a  characteristic  German  thing.  She  moved  Plauen  to 
St.  Gall.  This  is  not  a  figure  of  speech.  She  actually 
transferred  her  embroidery  machines  over  onto  Swiss 
soil.  They  worked  day  and  night  to  produce  the 
Brobdingnagian  X  shirts  that  I  have  just  described. 

The  shirts  represent  merely  a  wartime  expedient 
These   German   factories   are   making   "Swiss"   em- 


SWITZERLAND  THE  BUFFER  STATE      165 

broideries  to-day,  and  just  as  soon  as  the  markets  of 
the  world  are  open  they  will  be  on  sale.  More  im- 
portant than  this  is  the  fact  that  when  their  home  in- 
dustries are  reestablished  their  product  will  also  be 
hawked  about  as  "genuine  Swiss"  embroidery.  The 
most  inferior  German  output  will  have  the  Swiss  label, 
will  be  sold  as  the  Swiss  article,  and  will  serve  to  give 
German  goods  an  opening  that  they  would  not  have 
if  they  flew  their  own  colors. 

Germany  duplicated  this  procedure  with  cotton 
gloves.  Chemnitz,  in  Saxony,  is  one  of  the  head- 
quarters of  this  industry.  The  Germans  moved  their 
glove  machines  to  St.  Gall  and  sent  over  hundreds  of 
German  girls  to  work  them.  These  factories  with 
their  workers  will  never  go  back.  If  the  Germans  can 
possibly  get  away  with  it  they  will  sell  these  gloves 
everywhere.  The  world  that  will  refuse  to  buy  Ger- 
man gloves  will  be  buncoed  into  buying  these  "Swiss" 
gloves  made  by  German  workers  on  German  machines 
in  Switzerland. 

In  this  matter  Germany  showed  her  usual  trade  in- 
genuity, as  an  incident  concerning  a  well-known  Ger- 
man buttonhole  silk  will  show.  This  silk  is  sold 
throughout  the  world,  especially  in  England,  and  is 
known  by  a  certain  characteristic  trade-mark.  Dur- 
ing the  second  year  of  the  war  the  manufacturers 
turned  their  business  over  to  a  competitor  at  Basel, 
who  filled  all  the  orders.  It  developed  that  the  un- 
wound silk  was  being  sent  from  Germany  into  Switzer- 
land, rewound,  packed  in  the  original  package,  and 
stamped,  "Made  in  Switzerland."     This  is  one  reason 


i66  PEACE  AND  BUSINESS 

why  a  certificate  of  origin  will  have  to  be  required  on 
all  foreign  goods  hereafter. 

We  have  now  entered  the  realm  of  the  most  sig- 
nificant of  all  the  German  wartime  economic  activities 
in  Switzerland,  and  the  one  that  bears  directly  on  the 
future.  The  moment  that  Germany  realized  that  she 
was  doomed  to  defeat  she  inaugurated  an  intensive 
campaign  of  penetration  that  was  a  marvel  of  organ- 
ization. As  in  Holland,  merchandise  became  propa- 
ganda. Despite  the  pinch  of  necessity  at  home,  both 
for  war  and  social  needs,  she  kept  on  supplying  the 
Swiss  market  with  every  conceivable  kind  of  com- 
modity. New  branches  of  German  firms  sprang  up 
in  all  the  cities  and  towns.  The  newspapers  and  peri- 
odicals were  flooded  with  advertisements  of  goods  that 
could  never  be  delivered.  The  whole  idea  was  to 
keep  the  German  industrial  name  unfurled  and  good- 
will going. 

Wherever  I  went  I  found  the  offices  of  the  Ham- 
burg American  and  the  North  German  Lloyd  Steam- 
ship Lines  not  only  open  but  flaunting  their  advertise- 
ments. At  Zurich,  for  example,  the  North  German 
Lloyd  has  imposing  offices  on  the  Bahnhofstrasse, 
which  is  the  main  street  of  this  "Httle  Berlin."  On 
the  window  was  painted  this  inscription:  "Bremen — 
New  York — via  Southampton;  Ocean  journey  5^ 
days."  At  the  moment  that  this  invitation  glittered 
in  gold  letters  before  the  Swiss  populace  the  ocean 
journey  described  was  about  as  feasible  as  the  pas- 
sage of  a  fat  German  through  the  eye  of  a  needle. 
An  insuperable  handicap  like  this  did  not  disturb  the 


SWITZERLAND  THE  BUFFER  STATE      167 


Teuton.  The  window  inscription  had  been  there  in 
peace  days;  it  proclaimed  one  little  phase  of  German 
world  authority,  and  it  remained  as  a  piece  of  Teu- 
tonic publicity. 

Throughout  the  war  Germany  made  every  eflfort  to 
control  the  Swiss  cotton-goods  industry.  Switzer- 
land had  a  considerable  export  business  with  Holland 
and  Scandinavia.  The  goods  had  to  pass  through 
Germany  on  the  way  to  the  consumer  because  the 
Rhine  is  the  great  highway  to  the  sea.  At  once  the 
German  authorities  said:  "We  cannot  let  you  ship 
these  goods  through  Germany.  Why  not  let  us  have 
them  for  our  own  use?"  This  procedure  did  two 
things:  It  kept  the  Swiss  trade  from  expanding, 
which  met  the  German  desire ;  and  it  also  added  to  the 
German  stores. 

Still  more  arrogant  was  the  attempt  of  the  Ger- 
man Watch  Dealers  Society  to  dominate  the  Swiss 
watch  industry.  As  most  people  know,  one  of  the 
principal  articles  of  Swiss  export  is  her  watches,  which 
go  to  every  section  of  the  world.  One  important  cus- 
tomer is  Holland,  who  reexports  these  watches  to  her 
numerous  colonies.  Just  as  soon  as  the  war  began 
the  Germans  saw  a  good  opportunity  to  control  this 
whole  export  business.  They  delayed  the  transport 
of  these  goods,  which,  like  the  cotton  articles  for  Hol- 
land and  Scandinavia,  had  to  pass  through  Germany. 
The  natural  result  was  that  the  Dutch  stocks  dwin- 
dled. When  Holland  protested  to  Germany  she  got 
a  communication  from  the  German  Watch  Dealers 
Society,  which  said :    "Give  us  your  orders  for  Swiss 


i68  PEACE  AND  BUSINESS 

watches  and  you  will  be  given  the  assurance  that  your 
merchandise  will  reach  you  without  any  annoyance  or 
delay." 

The  German  object  was  quite  clear.  It  was  set 
forth  in  an  official  statement  by  the  Federation  of 
Swiss  Watchmakers,  which  declared : 

"The  difficulties  and  annoyances  which  Germany 
raises  in  the  transit  of  our  watches  to  neutral  coun- 
tries and  even  to  nations  allied  with  the  German  Em- 
pire have  an  importance  which  leaves  no  doubt.  Ger- 
many wants  to  get  hold  of  a  part  of  the  watch  mar- 
ket by  compelling  the  Dutch  wholesale  dealers,  and 
others  as  well,  to  place  their  orders  not  directly  in 
Switzerland  but  through  intermediate  German  agents. 
The  latter  will  take  for  their  payment  a  well-propor- 
tioned commission  and  by  this  process  will  help  to 
strengthen  the  German  rate  of  exchange.  To  carry 
out  their  plan  they  make  adequate  transit  depend  upon 
the  use  of  German  agents." 

The  Swiss  Watch  Federation  made  such  a  protest 
to  Germany  that  this  scheme  of  blackmail — it  was 
nothing  less — failed.  The  significance  of  the  per- 
formance is  that  it  gives  another  evidence  of  German 
cunning,  which  must  be  reckoned  with  now  that  re- 
construction has  arrived  and  Germany  will  test  every 
resource  to  restore  her  battered  prestige. 

I  have  said  that  Germany  made  every  possible  sac- 
rifice to  get  and  hold  Swiss  trade  during  the  war  in 
the  hope  that  the  good-will  thus  obtained  would  con- 
tinue with  peace.  I  could  give  countless  evidences. 
Two,   however,   will   suffice.     Despite  her  desperate 


SWITZERLAND  THE  BUFFER  STATE   169 

economic  plight  she  furnished  one  milHon  dollars 
worth  of  mains  and  insulators  for  the  electrification  of 
the  Swiss  railways  during  the  spring  of  1918.  The 
remarkable  feature  of  this  purveying  was  that  Switzer- 
land tried  to  get  this  material  in  France,  England  and 
the  United  States  without  success.  The  only  country 
who  would  supply  her  was  her  next-door  neighbor, 
then  face  to  face  with  scarcity  of  supplies  at  home  and 
an  embargo  abroad.  I  cite  this  episode  to  show  that 
whatever  her  handicaps  Germany  will  make  a  surpris- 
ing stab  at  reconstruction. 

The  city  of  Zurich  wanted  to  build  a  bridge,  and 
invited  bids.  To  the  great  surprise  of  everybody  the 
only  bidders  were  Germans. 

When  someone  asked  a  Swiss  manufacturer  why 
he  did  not  compete  he  replied  :  "To  compete  with  the 
Germans  would  be  ruinous.  They  are  determined  to 
get  the  business." 

One  more  illustration  will  show  that  with  the  end 
of  the  war  in  sight  and  defeat  inevitable  the  German 
manufacturer  was  looking  ahead.  The  manager  of 
the  Zurich  branch  of  an  American  machinery  firm 
showed  me  a  postal  card  that  he  had  just  received  from 
a  German  house  at  Mannheim  offering  a  complete  line 
of  small  tools.  It  stated :  "As  soon  as  the  war  is 
over  we  shall  be  in  a  position  to  serve  you.  We  ad- 
vise you  to  book  your  orders  now.'" 

That  Germany  regarded  Switzerland  as  one  of  her 
most  important  economic  bridgeheads  after  the  war 
is  evidence  nowhere  else  quite  so  convincingly  as  in 
Basel.     This  enterprising  city  on  the  Rhine,   whose 


170  PEACE  AND  BUSINESS 

population  of  150,000  includes  40,000  Germans,  is 
the  hub  of  Continental  travel.  Of  all  Swiss  towns  it 
is  second  only  to  Zurich  in  importance,  being  the  cen- 
ter of  the  industries  in  silk  ribbons,  chemical  prod- 
ucts and  machinery.  With  the  exception  of  Frank- 
fort-on-the-Main  it  was  visited  by  more  tourists  in 
peace-times  than  any  other  European  city,  for  the  rea- 
son that  most  of  the  tide  of  travel  flowing  south  from 
Germany  scatters  from  this  point  to  Switzerland, 
France  and  Italy. 

Germany  has  used  Basel  for  social  and  economic 
penetration  and  it  will  be  one  of  her  principal  strong- 
holds during  these  years  of  restoration.  With  that 
uncanny  foresight  which  helped  to  make  her  industri- 
ally great  she  has  a  plant  ready  for  business.  Its 
nerve  center  is  the  great  Badische  Bahnhof — the 
Baden  railway  station — which  presents  the  remark- 
able spectacle  of  a  vast  German  terminal  built  on  Swiss 
soil.  Through  its  immense  freight  station  comes  all 
the  German  coal  for  Switzerland. 

One  day  last  November  I  walked  out  and  took  a 
look  at  this  towering,  ugly,  typically  German  mass 
of  brick  and  stone.  It  was  like  a  vast  morgue.  De- 
spite the  fact  that  no  passenger's  footsteps  echoed 
through  its  immense  waiting  rooms  everything  was 
spick  and  span,  ready  for  the  first  train  to  come  puff- 
ing in  with  its  load  of  German  visitors.  This  station 
is  bound  to  be  an  important  factor  in  the  German  re- 
habilitation, for  the  reason  that  with  the  starting  up 
of  German  industry  it  will  teem  with  German  mer- 
chandise.   The  army  of  German  agents,  propagand- 


SWITZERLAND  THE  BUFFER  STATE   171 

ists  and  citizens  generally  in  Basel  will  see  that  it  is 
passed  on. 

Within  sight  of  the  station  I  saw  a  succession  of 
immense  brick  warehouses.  They  were  so  jammed 
with  bales  of  cotton  that  the  staple  had  burst  through 
some  of  the  windows. 

I  asked  an  American  who  accompanied  me  about 
them,  and  he  replied:  "They  are  all  German  ware- 
houses, and  the  cotton  you  see  is  part  of  the  immense 
hoard  that  the  Germans  have  piled  up  in  Switzerland. 
Germany  owns  these  warehouses  and  they  will  fit  into 
her  commercial  scheme  after  the  war." 

Basel  is  of  peculiar  interest  to  us  now  because  the 
German  dyestuffs  that  were  formerly  shipped  by  way 
of  Hamburg  and  Antwerp  will  come  out  through  the 
great  Baden  station.  During  the  past  eighteen  months 
the  German  dye  makers,  conscious  of  the  growing 
British  and  American  independence  of  them,  have 
transferred  hundreds  of  their  formulas  to  Basel  manu- 
facturers, who  will  export  them  under  Swiss  labels  if 
it  is  possible  to  do  so.  Some  of  the  Swiss  dye  manu- 
facturers, however — and  there  is  a  considerable  colony 
at  Basel — have  a  union  to  prevent  this  camouflage  per- 
formance. 

It  all  gets  down  to  this:  If  we  are  to  protect  our 
trade-marks  and  prevent  the  dumping  of  an  immense 
amount  of  German  stuff  masquerading  under  Swiss 
titles  let  the  Allied  world  keep  its  eye  on  Basel. 

Bulwarking  the  whole  German  commercial  offensive 
in  Switzerland  is  a  perfectly  organized  banking  sys- 
tem.    Credit — that  lifeblood  of  business — is  theirs  in 


172  PEACE  AND  BUSINESS 

almost  unlimited  quantities.  Not  only  are  the  Ger- 
man hooks  fastened  into  many  Swiss  financial  institu- 
tions but  the  Germans  have  what  practically  amounts 
to  their  own  bank  in  Zurich.  This  is  the  Bank  for 
Electrical  Undertakings.  Though  housed  in  a  Swiss 
building  on  the  main  street  of  the  leading  Swiss  com- 
munity it  is  German  to  the  core.  Part  of  the  chain 
of  German-controlled  banks  in  a  dozen  countries,  of 
which  the  great  Banca  Commerciale  Italiana  of  Milan 
is  the  Gibraltar,  it  is  the  dynamo  behind  a  far-flung 
Teutonic  industrial  enterprise. 

This  Zurich  bank  is  really  the  Zurich  branch  of  our 
old  friend  the  "A.E.G.,"  the  German  electrical-ma- 
chinery octopus,  whose  tentacles  reach  out  all  over 
Europe.  Together  with  the  Banca  Commerciale 
Italiana  it  controls  the  telephone  and  other  public- 
utility  systems  throughout  Italy,  and  the  tramways  and 
electric-lighting  system  in  Constantinople.  Because 
it  operates  under  a  Swiss  charter  it  is  able  to  under- 
write German  institutions  everywhere  in  the  world. 
A  whole  new  era  of  activity  for  it  is  just  beginning. 

If  you  have  the  slightest  doubt  about  the  real  na- 
tionality and  purpose  of  the  Bank  for  Electrical  Un- 
dertakings just  take  a  look  at  the  personnel  of  the 
board  of  directors.  Heading  the  list  is  Arthur  von 
Gwinner,  Germany's  foremost  financier  and  co-direc- 
tor with  Helfferich  of  the  all-powerful  Deutsche  Bank 
of  Berlin.  Next  comes  Dr.  Walter  Rathenau,  presi- 
dent of  the  A.E.G.  Other  well-known  German  indus- 
trial and  financial  figures  on  the  board  are:  Herbert 
Gutmann,  director  of  the  Dresdner  Bank  in  Berlin,  one 


SWITZERLAND  THE  BUFFER  STATE   173 

of  the  four  famous  "D"  banks ;  Prof.  Bernhard  Salo- 
mon, the  scientific  head  of  the  A.E.G. ;  and  Hugo 
Landau,  one  of  the  great  commercial  experts  of  Berlin. 
From  this  imposing  array  of  Germanic  commercial 
genius  you  can  readily  see  how  much  opportunity  for 
control  is  vested  with  the  Swiss  directors. 

None  of  these  economic  foundations  for  future 
trade  could  be  reared  without  the  human — or  shall 
I  say  the  unhuman — element.  In  no  other  neutral 
country  is  the  German  personally  so  active  as  in  Switz- 
erland. Nor  is  this  entirely  due  to  the  large  German- 
born  and  German-speaking  population.  It  results 
directly  from  the  Teutonic  desire  to  harness  Helvetia 
to  the  German  economic  ambition. 

No  matter  where  you  go  you  almost  stumble  over 
a  German  salesman.  To  show  you  the  extent  of  this 
campaign  I  have  only  to  say  that  of  6,340  traveling 
salesmen  who  visited  Switzerland  in  1913,  4,737  were 
Germans,  1,513  were  French,  eighty-seven  were  Eng- 
lish and  three  were  American.  There  is  much  food 
for  thought  on  the  part  of  American  exporters  in  these 
figures. 

The  German  has  wormed  his  way  into  hundreds  of 
Swiss  stock  companies.  In  order  to  escape  observa- 
tion these  German  interests  usually  do  not  aspire  to 
representation  among  the  officers,  but  seldom  fail  to 
intrench  themselves  on  the  boards  of  directors,  where 
the  real  influence  lies.  More  dangerous  than  this, 
however,  is  the  tendency  of  the  German  economic 
penetration  in  Switzerland  to  hide  behind  the  protec- 


174  x^EACE  AND  BUSINESS 

tion  of  Swiss  citizenship.  In  Holland  this  is  not  so 
easy,  for  the  reason  that  a  special  act  of  Parliament 
must  be  passed  for  each  new  citizen.  It  is  a  long  and 
complicated  performance  not  without  a  good  deal  of 
pubhcity.  In  Switzerland  it  is  easier.  That  is  why 
the  incident  that  I  reported  at  the  beginning  of  this 
article  is  so  significant.  There  will  be  hundreds  of 
thousands — millions  if  possible — of  new  Swiss  citizens 
during  the  next  five  years. 

Since  I  am  dealing  with  this  human  element  let  me 
emphasize  a  fact  that  I  have  often  stated  before:  In 
every  neutral  and  Allied  country  where  I  saw  and  con- 
versed with  German  prisoners  of  war  I  invariably 
found  them  studying  languages.  Most  of  them  were 
more  eager  to  master  English  than  any  other  tongue, 
but  thousands  were  also  wrestling  with  Spanish.  This 
language  study  was  inspired  by  the  German  authori- 
ties. It  is  a  well-known  fact  Germany  expects  to  re- 
coup some  of  her  fortunes  in  South  America,  hence 
the  interest  in  Spanish. 

I  place  the  capstone  on  the  monument  of  German 
abuse  of  Swiss  hospitality  by  saying  that,  not  content 
with  seeking  to  prostitute  Swiss  trade  and  Swiss  insti- 
tutions generally,  the  Germans  used  Switzerland  as  the 
market  place  for  their  war  loot.  The  headquarters  of 
this  traffic  was  Geneva.  Here,  with  the  aid  of  Bul- 
garians, Turks  and  renegade  citizens  of  Allied  coun- 
tries, the  robber  barons  established  quite  a  brisk  trade 
in  church  vestments,  family  plate,  jewelry  and  even 
securities — all  wrested  from  the  unhappy  inhabitants 
of  Belgium  and  northern  France.     When  it  was  im- 


SWITZERLAND  THE  BUFFER  STATE   175 

possible  to  get  this  booty  out  of  Germany  in  the  ordi- 
nary channels — a  great  deal  of  it  was  segregated  at 
Frankfort — the  German  war  profiteers  used  aero- 
planes. There  is  enterprise  as  well  as  shamelessness 
in  the  German  idea  of  the  fruits  of  war. 

Do  not  think  that  little  Switzerland  has  sat  back 
calmly  and  taken  her  large  and  almost  continuous  dose 
of  German  economic  medicine  without  a  protest  or 
determination  to  fight  back.  One  of  the  many  mis- 
takes that  Gennany  made  in  going  to  war  was  that  it 
unmasked  her  and  her  methods  before  the  world.  Out 
of  this  knowledge  both  neutrals  and  belligerents  have 
welded  a  powerful  weapon  for  defense.  If  Germany 
can  put  over  her  old  trade  tricks  it  will  only  be  because 
she  is  stronger  and  continues  to  be  more  cunning  than 
the  rest  of  the  world. 

Throughout  Switzerland,  even  in  that  section  which 
speaks  and  thinks  German,  there  is  a  growing  desire 
for  economic  independence.  For  one  thing  a  move- 
ment has  been  organized  by  leading  Swiss  manufac- 
turers to  forestall  after-the-war  competition  in  foreign- 
made  goods  fraudulently  described  as  "of  Swiss 
origin."  A  national  trade-mark  for  genuine  Swiss  ex- 
ports has  been  created.  This  trade  name  is  "Spes,"  a 
word  coined  by  taking  the  initial  letters  of  Syndicat 
pour  I'Exportation  Suisse,"  the  cooperative  associa- 
tion to  which  the  trade  name  belongs. 

The  syndicate  concedes  the  use  of  the  name  Spes 
only  to  "products  of  the  Swiss  soil,  products  of  the 
Swiss  mining  industry  or  merchandise  having  under- 
gone in  Switzerland  manufacture  or  modification  such 


176  PEACE  AND  BUSINESS 

as  to  confer  on  it  a  new  character."  To  obtain  the 
right  to  use  the  name  Spes  on  his  goods  the  manufac- 
turer or  exporter  must  become  a  member  of  the  syndi- 
cat  pour  r Exportation  Suisse.  To  become  a  member 
of  the  syndicate  the  person  desiring  the  protection  of 
the  trade  name  Spes  must  prove  the  genuine  Swiss 
character  of  his  product.  It  is  not  enough  for  the 
goods  to  have  been  produced  or  to  have  undergone 
manufacture  on  Swiss  soil.  In  addition  the  manu- 
facturer or  producer,  if  an  individual,  must  have  been 
of  Swiss  nationality  before  July  i,  1914,  or  have  been 
nationalized  for  at  least  ten  years.  In  the  case  of 
share  companies  the  president  and  two-thirds  of  the 
board  of  directors  must  be  of  Swiss  origin  or  Swiss 
citizenship,  and  at  least  two-thirds  of  the  capital  stock 
must  be  Swiss.  All  these  facts  must  be  set  forth  on 
the  application  for  membership  in  the  syndicate,  and 
the  claims  of  the  applicant  are  carefully  investigated 
by  the  directors  of  the  syndicate  before  membership 
is  granted. 

Membership  in  the  syndicate  does  not  confer  upon 
the  member  the  right  to  use  the  mark  Spes.  If  he 
desires  to  use  it  he  must  make  a  special  application  and 
sign  a  special  agreement.  After  all  these  formalities 
have  been  met  the  use  of  the  mark  Spes  is  authorized. 
Its  use  does  not  prohibit  the  member  from  using  his 
private  trade  mark  if  he  has  one.  The  use  of  Spes  on 
products  of  inferior  quality,  the  sale  of  which  might 
tend  to  injure  the  reputation  of  the  trade  mark,  is 
strictly  prohibited.  The  use  of  this  guaranty  of  un- 
adulterated Swiss  origin  is  vested  in  the  control  com- 


SWITZERLAND  THE  BUFFER  STATE       177 

mittee  of  the  s}'Tidicate,  which  has  ample  authority  to 
punish  any  abuse.  This  admirable  movement  is  a  body 
blow  at  one  of  Germany's  favorite  trade  subterfuges. 
It  should  be  adopted  by  every  neutral  country  where 
there  is  the  slightest  possibility  of  a  strong  German 
come-back. 

The  second  important  phase  of  the  Swiss  declara- 
tion of  economic  independence  is  in  the  electrification 
of  the  Swiss  railways.  Its  sole  purpose  is  to  free  the 
country,  so  far  as  possible,  of  the  thraldom  to  German 
coal.  The  electrification  was  begun  in  191 5  between 
Erstfeld  and  Bellinzona  and  includes  the  famous  St. 
Gotthard  tunnel.  This  triumph  of  engineering  skill 
and  perseverance — so  familiar  to  tourists — completed 
the  railway  system  that  linked  the  North  Sea  with  the 
Mediterranean.  It  likewise  gave  Germany  a  direct 
route  for  her  products  into  Italy.  She  helped  to  finance 
the  enterprise  and  wrung  the  usual  concessions,  which 
included  drastic  freight  rebates.  This  concession  was 
made  on  the  understanding  that  Germany  would  con- 
tribute a  certain  amount  of  traffic  every  year.  The  war 
shot  this  traffic  to  pieces.  Switzerland  is  now  seeking 
further  freedom  from  German  domination  by  making 
a  strong  effort  to  abrogate  this  agreement,  which  is 
known  as  the  St.  Gothard  Convention,  If  she  succeeds 
in  doing  it  another  nail  will  be  driven  into  the  German 
commercial  coffin. 

No  other  feature  of  this  new  Swiss  economic  free- 
dom is  of  such  world-wide  importance  as  the  inter- 
nationalization of  the  Rhine,  which  was  decreed  in  the 
Peace  Treaty.     For  years  Germany  regarded  Rhine 


178  PEACE  AND  BUSINESS 


traffic  as  her  particular  property.  Every  restriction 
placed  upon  it  had  one  object  in  mind,  and  that  object 
was  the  diversion  of  trade  and  trade  authority  to  her- 
self. The  Rhine  is  vital  to  Swiss  import  and  export, 
for  the  reason  that  the  great  mass  of  raw  materials  for 
Swiss  factories  is  unloaded  from  ocean  carriers  at  Rot- 
terdam and  sent  up  the  famous  river  and  its  tributary 
canals  in  canal  boats.  Swiss  exports  go  out  the  same 
way.  Germany's  control  of  all  this  Rhine  traffic  was 
cruel  and  selfish.  Happily  it  is  at  an  end.  It  has 
ceased  to  be  a  bargaining  asset  for  the  discredited 
Fatherland. 

Swiss  industry  which  furnishes  Niagara  Falls  with 
turbines  and  the  London  Underground  with  equip- 
ment, so  wide  is  its  field,  is  emerging  from  the  war 
revitalized.  It  has  discovered  who  its  real  friends  are, 
and  America  is  revealed  as  one  of  them.  Study  it  and 
you  find  that  it  is  both  striking  and  picturesque.  Take, 
for  example,  the  great  Saurer  establishment  at  Arbon, 
which  is  known  throughout  the  world.  Here  Adolph 
Saurer,  the  Grand  Old  Man  of  Swiss  industry — who 
rose  from  forge  hand  to  high  authority — is  intrenched 
like  a  feudal  lord.  He  looks  like  a  combination  of 
Walt  Whitman  and  Santa  Glaus  and  though  well 
beyond  eighty  he  still  goes  through  his  mills  every  day 
with  a  word  of  greeting  for  his  army  of  employees. 

I  spent  a  day  with  him  last  October.  He  lives  in  a 
fascinating  seventeenth-century  house  with  mullioned 
windows  that  look  out  on  Lake  Constance.  To  the  left 
and  right  are  Germany  and  Austria,  while  straight 
ahead  on  a  clear  day  you  can  see  the  famous  little  town 


SWITZERLAND  THE  BUFFER  STATE      179 

where  Zeppelin  realized  his  dream  of  aerial  travel. 
The  residence  is  in  the  midst  of  the  works.  To  it  Mr. 
Saiirer  came  as  a  poor  young  man,  and  here  he  has  re- 
mained while  the  industrial  city  with  its  whirring 
wheels  and  pounding  hammers  literally  grew  up  about 
him.  Nowhere  in  the  world  perhaps  could  you  see 
such  a  combination  of  an  almost  medieval  and  patri- 
archal dignity  linked  up  with  the  hum  and  throb  of 
modern  industry.  Accentuating  this  contrast  is  Hip- 
poly  te  Saurer,  a  live  and  progressive  manufacturer 
who  will  succeed  his  father  as  head  of  the  establish- 
ment and  who  is  the  coming  industrial  leader  of  Switz- 
erland. 

Of  the  same  mold  is  Emile  Reichenbach,  whose  im- 
mense establishment  at  St.  Gall  bears  the  same  relation 
to  embroidery  that  the  Saurer  plant  does  to  motor 
trucks  and  machinery.  He  is  a  type  of  the  energetic, 
wide-awake  Swiss  captain  of  capital  who  saw  from  the 
start  that  the  salvation  of  the  world  and  the  integrity 
of  trade  lay  in  an  Allied  triumph. 

Representative  of  the  younger  Swiss  financial  group 
and  a  self-made  man  of  the  American  brand  is  Charles 
J.  Brupbacher,  head  of  one  of  the  great  private  banks 
in  Zurich,  whose  quarters  are  a  marble  palace  that 
would  do  credit  to  Fifth  Avenue  or  lower  Broadway  in 
New  York.  He  began  as  an  obscure  clerk ;  to-day  his 
interests  are  almost  universal.  His  long  period  of 
training  includes  service  in  London  and  Paris.  The 
Swiss  bankers  are  thorough. 

Even  that  powerful  body  of  Swiss  sentiment  which 
has  been  friendly  to  Germany  is  seeing  the  light.     I 


i8o  PEACE  AND  BUSINESS 

have  in  mind  E.  Schulthess,  former  president  of  the 
Swiss  Confederation,  member  of  the  Federal  Council 
and  the  real  boss  of  the  country.  When  I  talked  to  him 
in  the  stately  Parliament  building  at  Berne  the  German 
twilight  had  set  in.  I  was  amazed  to  hear  him  express 
himself  in  terms  of  friendship  and  admiration  both  for 
America  and  for  her  Allies.  Coming  from  him  it  was 
a  significant  utterance. 

That  Swiss  industry  is  aroused  to  the  necessity  of 
economic  independence  of  Germany  is  evident.  Ship- 
ping affords  an  illuminating  case  in  point.  When 
William  Jennings  Bryan  was  Secretary  of  State  he 
gave  the  world  a  laugh  when  he  solemnly  invited 
Switzerland  "to  send  a  warship  to  help  open  the  Pan- 
ama Canal."  Switzerland  did  not  own  even  a  sea- 
going bathtub.  This  jest  is  now  reversed.  The  new 
commercial  spirit  is  reflected  in  the  organization  of  a 
shipping  syndicate  which  contributed  a  fund  of  twenty 
million  dollars  to  charter  or  build  a  merchant  marine 
that  will  fly  the  Swiss  flag.  Seven  million  dollars  of 
this  was  underwritten  by  the  chocolate  trust.  The 
syndicate  has  already  acquired  some  of  the  ships  used 
for  the  Belgium  relief. 

A  still  further  evidence  of  the  growth  of  Swiss  ani- 
mosity toward  Germany  was  shown  in  October  191 8 
when  a  Swiss  Week  was  held  throughout  the  country. 
The  whole  idea  was  to  make  an  impressive  demonstra- 
tion of  Swiss-made  goods.  It  was  followed  up  by  a 
Master  Messe  similar  to  the  British  Industries  Fair 
and  which  only  showed  Swiss  manufactures. 

What  are  the  American  opportunities  in  Switzer- 


SWITZERLAND  THE  BUFFER  STATE   i8i 


land?  Being  an  industrial  country  she  affords  no 
great  market  for  finished  goods  except  agricultural 
machinery.  But  she  could  do  business  with  an  Ameri- 
can bank  or  the  branch  of  a  foreign  trade  corporation 
patterned  after  the  British  Trade  Corporation,  which 
is  absolutely  essential  for  the  safeguarding  and  devel- 
oping of  our  new  world-trade.  We  proved  to  Switzer- 
land during  the  dark  days  of  the  war  that  we  were 
ready  and  willing  to  feed  her  without  exacting  the 
compensations  that  Germany  exorted  from  her  on  the 
top  of  usury.  We  may  well  follow  this  up  in  a  big 
business  way. 


V — The  German  in  Spain 


BA.CK  in  the  thirties  George  Borrow  journeyed  to 
Spain  as  agent  of  the  British  Bible  Society  to 
print  and  circulate  the  Scriptures.  He  went 
everywhere  spreading  the  Good  Word.  After  many 
adventures  he  wrote  the  classic  known  as  The  Bible  in 
Spain.  Years  afterward  the  Teuton  propagandist  fol- 
lowed in  his  footsteps,  but  on  a  less  holy  errand.  He 
carried  a  sample  case  in  one  hand  and  diplomatic  gold 
in  the  other.  He  made  the  land  of  the  don  and  the 
duenna  the  target  of  such  highly  organized  and  in- 
tensive social  and  economic  penetration  that,  save  only 
Sweden,  it  became  the  neutral  German  stronghold  in 
Europe.  The  story  of  his  achievement  therefore  may 
well  be  called  the  German  in  Spain. 

As  is  the  case  with  Holland  and  Switzerland,  Spain, 
during  world  reconstruction,  has  a  peculiar  signifi- 
cance for  the  United  States.  For  one  thing  she  repre- 
sents a  whole  new  field  for  American  export  trade. 
Another  reason  is  that  the  remarkable  campaign  of 
propaganda  carried  on  by  the  Germans  during  the  war 
will  inevitably  bear  fruit  these  next  few  years.  In  no 
other  non-warring  nation  did  the  late  Imperial  German 
Government  wage  such  a  crusade  for  good-will  as  in 

182 


THE  GERMAN  IN  SPAIN  183 

Spain.  Nowhere  was  she  so  successful.  Although  the 
war  is  over  the  story  of  that  attempt  at  Germanization 
is  of  interest  because  it  reveals  some  of  the  tactics  that 
will  be  employed  to  try  to  rehabilitate  the  Teuton  in 
world  commercial  favor. 

Why  was  Germany  so  keen  about  having  the  friend- 
ship and  support  of  Spain?  The  answer  is  easy. 
Spain  is  simply  one  of  a  group  of  German  social  and 
commercial  jumping-off  places.  She  must  have  some 
sanctuary  because  it  will  be  raining  anti-Germanism 
for  a  good  while  to  come.  Germany  needed  a  country 
where  her  industry  was  a  going  concern  the  moment 
the  armistice  was  signed.  It  has  already  enabled  her 
to  stamp  "made  in  Germany"  on  her  wares  and  dis- 
pose of  them  in  markets  that  will  be  hostile  to  any 
products  with  the  Germanic  trademark.  In  other 
words  Spain  today  is  part  of  a  vast  productive  scheme 
that  includes  Holland  and  Switzerland. 

Economic  mastery  of  Spain  has  peculiar  advantages. 
During  the  war  the  Germans  saw  it  as  a  step  toward 
the  conquest  of  the  Mediterranean  and  therefore  a 
definite  weapon  against  their  ancient  enemy,  France. 
Still  another  and  equally  vital  reason  that  comes 
straight  home  to  us  is  that  Spain  and  South  America 
are  closely  linked.  Though  the  Latin-American  repub- 
lics are  far  removed  and  represent  a  totally  different 
idea  in  national  government,  they  still  regard  Spain  as 
the  mother  country  and  take  their  pleasures,  vices  and 
fashions  from  her.  Germany  has  long  had  her  greedy 
eye  on  our  neighbors.  Her  whole  propaganda  in  Spain 
never  lost  sight  of  this  golden  goal  that  lies  beyond  the 


i84  PEACE  AND  BUSINESS 

balmy  southern  seas.     It  Is  well  worth  watching  now. 

The  Spain  of  today  is  not  the  Spain  of  your  tradi- 
tion or  your  imagination.  It  is  remote  from  being  the 
colorful  and  romantic  domain  which  was  once  the 
mainspring  of  great  adventure  and  the  inspiration  of 
poet  and  painter.  The  glories  of  Velasquez  and  Cer- 
vantes have  not  been  revived  in  our  day.  She  presents 
the  spectacle  of  sad  contrast  with  a  departed  splendor. 
One  a  treasure  house  of  art  and  wealth,  the  haven  of 
mighty  armadas,  the  nerve  center  of  a  far-reaching 
power  on  land  and  sea,  she  finds  herself  rent  with  dis- 
order and  a  tool  for  Germanic  conspiracy. 

She  has  no  twentieth-century  Cortez  to  re-create  her 
one-time  world  vision ;  she  lacks  a  contemporary  Cas- 
telar  to  win  the  multitude  with  the  magic  of  his  elo- 
quence or  to  guide  her  ship  of  state  with  steady  hand 
through  the  perilous  waters  of  uncertainty.  There  is 
not  even  an  up-to-date  Don  Quixote  to  tilt  at  the  wind- 
mills of  discontent  fanned  by  Teutonic  hot  air. 

Life  with  her  is  still  one  plot  after  another.  To  a 
degree,  greater  than  existed  in  Russia  that  was,  she  is 
like  a  national  bomb  factory.  Spain  always  has  a  pre- 
tender in  her  midst.  Worst  of  all,  the  ruling  classes — 
that  is,  the  classes  that  rule  today — have  been  hand  in 
glove  with  a  vast,  close-knit  and  effective  German 
propaganda  that,  aiming  at  the  root  of  Hispanic  eco- 
nomic independence,  subtly  reached  out  to  influence  the 
whole  world  that  thinks,  works,  buys  and  sells  in 
Spanish, 

Why  is  Spain  so  readily  assimilated  by  the  German? 
For  one  thing  she  has  not  kept  pace  with  the  march  of 


THE  GERMAN  IN  SPAIN  185 

events?  Maiiana — tomorrow — represents  the  effort 
that  always  will  be  made,  and  never  is.  Quien  sahef — • 
who  knows  ? — is  the  undoer  of  the  national  will.  More- 
over, the  Spaniard  of  other  days  took  to  intrigue  as 
naturally  as  a  duck  takes  to  water.  His  descendants 
have  not  quite  lost  the  habit.  When  the  German  came 
along  armed  with  money  and  malice  to  rear  a  new 
trade  and  political  outpost  for  his  empire  he  found  in 
Spain  ready  and  willing  co-workers. 

If  you  know  anything  about  German  economic  pene- 
tration you  also  know  that  its  conquest  of  trade  is 
merely  one  facet  of  a  many-sided  ambition.  German 
capital  is  not  only  the  most  exacting  in  the  world  but 
likewise  the  most  political.  Just  as  every  German 
salesman  is  a  secret  agent  for  his  government  so  is 
each  step  in  the  development  of  Teutonic  foreign  trade 
inspired  by  national  spirit.  Germany's  ends  have 
always  had  to  be  served  no  matter  if  they  disrupted  a 
little  thing  like  the  domestic  peace  and  commercial 
harmony  of  another  nation. 

Take  Spain.  In  the  natural  course  of  events  and 
despite  our  war  with  her,  she  fostered  the  greatest 
good  will  toward  the  United  States — a  national  state 
of  mind  inspired  by  the  king  himself,  who  has  always 
had  the  greatest  admiration  for  Yankee  institutions. 
Long  before  the  world  war  began,  the  Kaiser,  as  the 
all-highest  mentor  of  world  conduct,  began  to  influ- 
ence the  Spanish  court.  When  the  war  broke  out  this 
desire  resolved  itself  into  an  organized  campaign. 
There  is  a  large  body  of  sentiment  in  Spain  friendly 
to  the  Allied  cause.    The  king  himself  is  said  to  have 


i86  PEACE  AND  BUSINESS 

been  favorably  disposed  toward  the  Entente  at  the  out- 
set. With  characteristic  cunning — and  it  was  merely 
part  of  the  economic  crusade  then  well  under  way — the 
German  agents  began  to  stir  up  trouble  and  lay  it  at  the 
door  of  pro-Ally  sentiment.  They  fomented  disorders 
and  held  the  king  responsible.  He  became  a  royal 
scapegoat  and  his  popularity  was  impaired.  The  Ger- 
mans went  so  far  as  to  threaten  to  support  the  pre- 
tender, Don  Jaime,  who  heads  the  forlorn  Bourbon 
hope,  if  Alfonso  did  not  cultivate  a  neutrality  that  was 
pro-German ! 

The  way  to  court  domination  was  comparatively 
easy,  because  the  three  ruling  classes  in  Spain — in  the 
aristocracy,  the  clergy  and  the  army — were  all  pro- 
German.  Spain  is  one  of  the  few  countries  where  the 
institution  of  caste  remains.  Hence  the  great  majority 
of  the  people,  who  really  represented  Allied  sympathy, 
had  no  influence. 

Germany's  role  as  mischief-maker  in  Spain  is  no 
new  one.  One  of  the  Kaiser's  particular  specialties 
was  to  be  a  professional  provoker  of  internal  troubles. 
It  was  important  that  he  succeed  in  Spain,  because 
Germany  must  have  a  port  in  the  post-war  anti- 
Germanic  storm. 

The  ex-Kaiser  specialized  for  fifteen  years  as  world 
meddler.  He  repeated  the  Spanish  performance  in 
many  climes.  He  had  a  finger  in  the  revolutions  in 
Portugal  and  China,  though  neither  of  them  produced 
the  pro-German  results  he  hoped  to  achieve.  The 
flare-up  in  Morocco  in  191 1,  which  came  near  igniting 
all  Europe,  was  directly  the  result  of  the  Emperor's 


THE  GERMAN  IN  SPAIN  187 

meddling.  The  whole  world  knows  how  King  Con- 
stantine  of  Greece  was  his  dupe.  If  that  wavering 
and  henpecked  royal  husband  had  listened  to  Venizelos 
he  would  have  saved  his  dynasty  and  not  be  an  exile 
in  Switzerland  today.  The  Casement  conspiracy  is 
familiar. 

Coming  nearer  home,  you  have  the  whole  Mexican 
muddle,  which  was  a  nest  of  German  conspiracy,  re- 
vealed by  the  publication  of  Herr  Zimmermann's  indis- 
creet note  and  countless  other  episodes  which  show 
how  persistent  was  Germany's  desire  to  foment  and 
disseminate  revolution  in  our  neighbor  republic,  all  to 
the  end  that  the  United  States  be  embarrrassed  and 
her  war  effort  curbed.  Cuba,  Haiti,  and  other  Latin- 
American  republics  have  all  felt  the  sinister  influence 
of  Potsdam. 

Most  of  these  ambitions  were  happily  doomed  to 
failure.  Spain  therefore  has  the  unique  distinction — 
if  you  want  to  call  it  so — of  being  the  one  place  where 
the  Kaiser  has  made  good  so  far  as  his  efforts  to  affect 
national  politics  are  concerned.  Spain  played  the  Ger- 
man game  as  the  Kaiser  wanted  it  played. 

One  of  the  chief  interpreters  of  the  Kaiser's  desires 
in  Spain  happened  to  be  an  individual  extremely  well- 
known  in  the  United  States.  He  is  no  other  than  the 
notorious  Captain  General  Weyler,  who  was  the  real 
cause  of  our  war  with  Spain.  When  he  was  Governor- 
General  in  Cuba  they  called  him  "Butcher"  Weyler. 
Instead  of  slaughtering  innocent  Cubans  he  German- 
ized public  opinion  in  Spain.  Weyler  is  of  German 
origin,  as  his  name  indicates,  and  despite  his  career  iii 


i88  PEACE  AND  BUSINESS 


Cuba— it  won  him  the  title  of  "The  Gila  Monster  of 
Spanish  Tyranny" — he  is  still  high  in  favor. 

Though  the  sun  has  set  upon  Spain's  world  glory 
you  must  not  get  the  idea  that  she  is  entirely  a  back 
number.  Whatever  the  Germans  touch  they  make 
efficient,  even  if  that  efficiency  is  the  badge  of  an  eco- 
nomic bondage.  Beggar  and  brigand  still  abound,  to 
be  sure,  but  there  is  a  modern  power  plant  in  historic 
Toledo,  and  an  electric  railway  line  whizzes  through 
old  Seville.  The  Spanish  north  is  criss-crossed  by 
railways  built  by  British  capital ;  German  gold  has  de- 
veloped an  extensive  water  power;  on  the  east  is  Bar- 
celona, the  Spanish  Manchester,  with  her  thousands 
of  looms;  while  on  the  north  coast  rises  Bilbao,  the 
Hispanic  Pittsburgh,  with  noisy  docks  and  throbbing 
mills.  Spain's  industrial  development  did  not  begin 
until  after  the  Spanish-American  War.  Up  to  that 
time  much  of  her  income  was  from  without.  When 
she  lost  her  colonies  she  had  to  bestir  herself  to  raise 
it  from  within. 

The  European  war  gave  her  the  greatest  prosperity 
that  the  country  has  had  since  the  brave  days  of  gal- 
leons and  grandees.  She  duplicated,  however,  the  ex- 
perience of  Sweden,  another  neutral  nation  whose 
purse  has  fattened  on  war  needs.  Summed  up  it  is 
this:  The  rich  Spaniards  grew  richer  and  the  poor 
Spaniards  became  poorer.  It  was  all  due  to  the  fact 
that  the  war  wealth  went  into  one  kind  of  pocket. 
While  the  cost  of  living,  which  is  no  respecter  of  race, 
creed  or  country,  has  gone  steadily  upward,  wages  in 


J 


THE  GERMAN  IN  SPAIN  189 


the  main  have  stood  still.  Here  is  the  source  of  most 
of  the  Spanish  disquiet. 

Over  the  whole  Iberian  Peninsula  hovers  the  influ- 
ence of  Germany.  It  is  a  small,  lazy  copy  of  Italy  be- 
fore the  break  with  the  Kaiser.  The  train  that  carried 
me  to  Madrid  from  Barcelona  was  drawn  by  a  German 
locomotive,  with  the  maker's  name  in  large  letters  on 
the  boiler.  The  hotel  at  the  capital  where  I  lodged 
was  a  miniature  exhibition  of  Teutonic  goods.  The 
bed  in  which  I  slept,  the  tub  in  which  I  bathed,  the 
bronze  clock  that  told  me  the  time  and  the  electric  fan 
that  kept  me  cool  were  all  German  made  and  German 
labeled.    The  boche  believes  in  advertising. 

One  thing  impressed  me  forcibly  after  I  crossed  the 
frontier  into  Spain.  It  was  a  German  salesman  at  the 
little  station  at  Portbou.  He  scrutinized  my  fellow- 
passengers — they  were  nearly  all  neutrals — with  eagle 
and  malevolent  eye.  It  showed  that  the  German  com- 
mercial emissary  was  also  a  German  government  agent. 
Since  there  were  approximately  80,000  Germans  in 
Spain  you  get  some  idea  of  the  army  of  press  agents, 
propagandists  and  imperial  well-wishers  that  Germany 
had  on  the  job.  They  are  still  there.  In  a  population 
of  20,000,000  they  are  an  effective  force. 

There  were  nearly  10,000  Germans  in  Spain  before 
the  war.  This  number  was  increased  by  the  travelers 
caught  in  the  wing  at  the  outbreak  of  hostilities,  by 
soldiers  and  civilians  from  Kamerun,  by  the  exodus 
from  Portugal  when  the  country  went  to  war,  and  by 
many  others  who  came  over  from  the  United  States  to 
help  the  cause.    No  matter  where  they  came  from,  they 


I90  PEACE  AND  BUSINESS 

began  to  study  Spanish  the  moment  they  entered  Spain. 
Here  you  get  one  of  the  keys  to  successful  German 
penetration,  whether  it  is  social,  economic  or  other- 
wise. No  other  form  of  flattery  is  so  efifective  as  that 
which  adopts  the  speech  and  customs  of  the  foreign 
land  in  which  you  happen  to  be.  The  Germans  know 
this  and  our  people  do  not. 

I  have  heard  Germans  conversing  with  each  other  in 
Spanish  in  Madrid  and  Barcelona  cafes.  They  do  not 
do  it  in  a  low  voice  either,  because  they  know  that  it 
pleases  the  Spaniard.  The  whole  successful  German 
invasion  of  Spain — as  in  Italy — is  reared  on  a  careful 
study  of  taste,  temperament  and  need.  It  begets  good 
will  and  it  sells  goods.  Wherever  you  find  German 
propaganda  in  Europe  or  South  America  you  also 
find  an  effective  line  of  selling  talk.  This  is  due  to  the 
fact  that  German  business  and  politics  are  so  closely 
related  that  it  is  impossible  to  separate  them.  In  other 
words,  Germany's  business  is  politics  and  her  politics 
business.  The  Fatherland  always  gets  a  dividend  out 
of  the  work  of  her  sons. 

The  German  propaganda  In  Spain  was  particularly 
interesting  to  our  business  because  it  concentrated 
upon  our  war  aims  and  our  commercial  operations  in 
the  kingdom.  The  first  step  in  this,  as  in  all  similar 
crusades,  was  knowledge  of  the  people.  The  German, 
for  example,  knows  that  the  Spaniard  is  proud  and 
sensitive  about  his  lineage.  Concede  that  he  is  an 
aristocrat,  and  therefore  a  gentleman,  and  he  will  go 
to  the  limit  to  serve.  The  German  has  played  heavily 
upon  this  amiable  weakness.     Flattery  is  one  of  thei 


THE  GERMAN  IN  SPAIN  191 

strong  Teutonic  cards.  The  American,  on  the  other 
hand,  goes  at  the  Spaniard  hammer  and  tongs.  He  is 
impatient  of  his  procrastination  and  frets  at  his  side- 
stepping. The  Spaniard  thinks  and  talks  in  proverbs 
which  are  often  more  picturesque  than  practical.  Most 
German  agents  carry  a  Httle  handbook  of  Spanish 
axioms  and  have  them  ready  to  quote  for  all  occasions. 

The  Spaniard  hates  most  foreigners.  His  antag- 
onism toward  the  English,  however,  is  less  than  that 
held  for  any  other  alien,  except  the  German.  His  lack 
of  hostility  in  this  respect  is  easily  explained.  For 
many  generations  there  has  been  a  considerable  British 
colony  throughout  Spain,  especially  in  the  copper  and 
wine  districts.  If  the  British  propaganda  had  been 
properly  effective  at  the  beginning  of  the  war — and 
the  English  themselves  were  the  first  to  admit  its  fail- 
ure— the  Germans  might  not  have  obtained  such  a 
foothold  on  influential  public  opinion.  The  British 
endeavors,  however,  depended  more  upon  literature 
than  upon  actual  contact,  whereas  the  German  was  on 
the  ground  and  busy  all  the  time. 

The  German  propaganda  in  Spain  was  a  marvel  of 
intelligent  application.  Its  whole  tendency  was  to 
show  by  word,  print  or  picture  the  close  and  "sympa- 
thetic" relation  between  Germany  and  Spain.  It  took 
the  form  of  tainted  war  news.  Spanish  books  that 
glorified  German  "kultur";  it  flattered  the  court  with 
"intimate  and  Inside"  news  from  the  Front;  in  short, 
when  backed  up  by  adroit  and  fulsome  praise  let  loose 
incessantly,  it  was  an  irresistible  force. 

Now  this  whole  network  of  espionage  and  propa- 


192  PEACE  AND  BUSINESS 

ganda  led  to  one  portal — the  gateway  of  business.  The 
Germans  in  Spain  realized  that  the  war  would  end 
some  day  and  that  they  would  lose.  Regardless  of 
results  their  commerce  must  go  on.  They  were  de- 
termined that  in  at  least  one  European  country  they 
would  be  able  to  "carry  on"  the  moment  the  Peace 
Treaty  was  signed,  and  they  were. 

How  was  this  accomplished?  Whenever  a  factory 
or  a  factory  site  was  offered  for  sale  the  first  and  best 
bidders  were  Germans.  If  there  was  the  slightest  like- 
lihood of  a  mining  property  being  put  on  the  market 
the  owners  got  a  polite  inquiry  from  an  interested 
Teuton.  If  the  output  of  farm,  orchard,  flock  or  herd 
was  to  be  sold  you  discovered  the  Germans  hotfoot 
after  it.  Almost  before  a  newspaper  containing  the 
advertisement  of  a  water  power  project  for  sale  was  on 
the  street  a  representative  of  Alemania,  the  Spanish 
for  Germany,  was  on  the  job. 

For  three  years  Germany  mobilized  immense  stores 
of  cotton,  copper,  oil  and  ore  in  Spain.  Knowing  these 
facts  you  can  now  look  at  the  export  figures  from  the 
United  States  to  Spain  during  three  years  and  make 
an  illuminating  deduction.  In  1913,  the  last  normal 
year  before  the  war,  the  Spanish  imports  from  the 
United  States  aggregated  $31,471,723;  in  1917  they 
had  grown  to  $76,992,669,  or  more  than  double. 
Though  Spain  has  supplied  some  of  the  Allied  coun- 
tries, especially  France,  with  certain  finished  products, 
the  fact  remains  that  a  considerable  portion  of  this 
large  increase  went  to  swell  the  German  hoards. 

Take  cotton  and  you  will  see  just  what  I  mean.    In 


THE  GERMAN  IN  SPAIN  193 

1913  we  exported  to  Spain  158,976,935  pounds  as 
against  229,309,705  pounds  in  19 15.  There  is  the 
same  relative  increase  in  various  other  commodities. 
These  stores  are  German  insurance  against  discrimi- 
nation by  the  Allied  nations  after  the  war.  Their 
policy  will  be  to  conserve  raw  materials  for  their  own 
trade. 

Remember  also  that  German  business  in  Spain  is 
going  on  without  interruption,  The  Allgemeine  Elek- 
trische  Gesellschaft,  otherwise  known  as  the  A,  E.  G., 
is  there  with  all  her  lights  turned  on.  This  huge  elec- 
tric-industry trust,  whose  long  arms  reached  out  to 
every  Continental  country  before  the  war,  is  the  back- 
bone of  Germanic  industrial  authority  in  Spain.  Here 
it  is  known  as  the  Thomson-Houston  Iberica,  It  has 
branches  in  all  the  large  cities. 

It  is  tribute  to  the  trade  tenacity  of  the  German  that 
in  the  face  of  his  economic  isolation  he  did  not  give 
up.  On  the  Alcala,  the  main  business  street  of  Madrid, 
the  Hamburg-American  Line  has  kept  magnificent  offi- 
ces open  and  ready  for  business,  though  there  was  no 
business  to  do.  This  in  itself  is  interesting.  It  be- 
comes much  more  impressive  when  I  tell  you  that  in 
the  show  window  was  a  huge  map  of  the  seven  seas, 
showing  the  trade  routes  traversed  by  the  line,  and — 
irony  of  ironies — alongside  was  a  complete  list  of  the 
hundreds  of  ships  flying,  or  that  once  flew,  the  Ham- 
burg-American flag. 

This  may  appear  ridiculous  to  you,  fully  familiar 
with  the  facts.  It  was  not  so  ridiculous  to  the  citizen 
of  Madrid  walking  up  and  down  that  main  street.    All. 


194  PEACE  AND  BUSINESS 

he  knew  was  what  he  saw ;  and  he  saw  before  him,  in 
the  midst  of  a  great  war  that  menaced  German  imperial 
existence,  that  the  Hamburg-American  Line  still  had 
every  one  of  her  ships. 

In  Spain  the  mighty  Metalgesellschaft  of  Berlin — 
the  huge  Germanic  Metal  Trust — got  its  hooks  into 
every  possible  ore  property.  Prior  to  the  war  the 
Krupps  had  a  strong  grip  on  the  iron  mines  in  the  west 
of  Spain.  The  substitute  for  this  supply  was  a  prac- 
tical monopoly  on  the  ore  product  of  Sweden. 


THE  GERMAN  IN  SPAIN  195 


ir 


German  business  in  Spain  is  built  on  the  well-known 
formula  which  welds  finance  and  industry  and  which 
may  be  said  to  have  this  cardinal  rule :  "We  can  give 
anybody  anywhere  anything  he  wants."  It  is  the 
boche's  foreign  trade  creed.  If  Antonio  Garcia  down 
in  old  Seville,  for  example,  wants  a  lavender  saddle 
with  a  pink  pommel  and  green  stirrups,  the  German 
leather  merchant  assumes  that  he  knows  what  he  wants 
and  makes  it  for  him  without  asking  a  question.  He 
even  congratulates  him  on  his  good  taste.  The  German 
never  makes  the  mistake  of  adopting  the  take-it-or- 
leave-it  policy.  If  a  manufacturer  orders  a  special 
machine  that  seems  ridiculous,  the  German  agent  im- 
mediately says :  "It's  a  splendid  idea  and  we  will  be 
glad  to  make  it." 

These  tactics — and  they  are  never  too  familiar  to  be 
repeated — combined  with  long  credit  and  accurate 
knowledge  of  needs,  have  built  up  the  German  business 
good  will  in  Spain  and  will  keep  it  alive  indefinitely. 

What  concerns  the  American  business  man  is  our 
opportunity  in  Spain.  Unfortunately  we  have  long 
neglected  it.  This  is  all  the  more  remarkable  when 
you  consider  that  the  geographical  location  of  Spain 
with  reference  to  our  eastern  seaboard  is  unusually 
favorable  for  trade  development  between  the  two  coun- 
tries. Look  at  the  map  and  you  will  see  that  the  west- 
em  coast  of  the  Iberian  Peninsula  is  nearer  New  York 


196  PEACE  AND  BUSINESS 

by  several  hundred  miles  than  any  of  the  northern 
European  ports  in  France  or  Great  Britain.  Vigo,  for 
instance,  is  exactly  four  hundred  miles  nearer  New 
York  and  Boston  than  Liverpool  is.  The  great  need 
is  a  direct  steamship  line  between  New  York  and  Vigo. 
Unfortunately  Vigo  has  no  hinterland,  no  railways, 
and  her  population  is  small.  If  we  really  mean  to  do 
business  in  Spain  in  a  large  way  we  could  remedy  all 
this.  It  is  an  opportunity  for  American  enterprise 
which  could  combine  a  check  to  the  German  economic 
advance  at  the  same  time. 

In  area  Spain  is  almost  equal  to  the  original  German 
Empire  or  France,  and  sixteen  times  larger  than  Bel- 
gium. Yet  the  trade  of  the  United  States  with  France 
in  normal  times  is  five  times  as  great  as  with  Spain. 
With  Holland  and  her  6,000,000  people,  our  trade  is 
three  times  larger  than  with  Spain  with  her  popula- 
tion of  20,000,000.  Little  Switzerland  with  less  than 
4,000,000  inhabitants,  an  inland  country  with  no  ocean 
outlets,  sold  us  in  peace  years  goods  about  equal  in 
value  to  what  we  import  from  Spain. 

The  big  fact  for  America  to  remember  at  this  mo- 
ment is  that  Spain  in  some  respects  is  the  most  impor- 
tant neutral  nation  in  Europe.  Now  is  the  time  for  a 
trade  offensive  in  Spain  if  we  are  going  to  do  business 
there  at  all.  In  1914  the  Spanish  buyer  began  to  turn 
to  American  goods,  like  typewriters,  office  supplies  and 
hardware,  which  were  formerly  supplied  by  German, 
French  and  British  jobbers  and  their  representatives. 
We  have  only  to  follow  up  this  lead. 

To  be  concrete,  let  me  quote  what  Dr.  C.  W.  A. 


THE  GERMAN  IN  SPAIN  197 

Veditz,  commercial  attache  to  the  American  embassies 
at  Madrid  and  Paris,  said  to  me  with  regard  to  our 
possible  trade  relations  in  Spain : 

"I  am  fully  persuaded  that  our  manufacturers  and 
dealers  would  find  it  well  worth  their  while  to  study 
the  Spanish  market  for  leather;  boots  and  shoes  and 
the  machinery  connected  with  their  manufacture; 
photographic  apparatus  and  supplies;  small  tools  and 
hardware ;  certain  lines  of  chemical  and  pharmaceu- 
tical products ;  coal ;  electrical  supplies,  materials  and 
apparatus;  glass,  musical  instruments,  candies,  gentle- 
men's furnishing  goods,  particularly  underwear;  cra- 
vats, shirts,  collars  and  cuffs;  cheap  jewelry;  surgical 
instruments  and  dental  supplies." 

One  reason  why  American  business  is  not  so  strongly 
intrenched  in  Spain  as  it  should  be  is  that  we  have 
made  so  many  of  our  usual  mistakes  in  foreign  trade 
there.  We  repeated,  for  instance,  the  chronic  blunder 
— it  has  cost  us  much  business  in  France  and  Bel- 
gium— of  leaving  the  representation  of  some  of  our 
interests  to  aliens,  who  are  often  Germans.  In  Spain 
this  continued  for  a  considerable  time  after  the  war 
broke  out.  It  gave  the  German  an  excellent  chance  to 
keep  going. 

The  road  to  a  permanent  trade  relation  is  through 
personal  representation.  A  postage  stamp  is  a  poor 
salesman,  especially  if  it  does  not  speak  the  language 
of  the  prospective  customer. 

Our  prize  oversight  in  Spain,  however,  is  the  failure 
to  establish  adequate  banking  facilities.  Incredible  as 
it  seems,  there  is  no  American  bank  in  the  kingdom. 


198  PEACE  AND  BUSINESS 

England  has  not  made  this  mistake.  When  you  go 
to  Madrid  or  Barcelona  today  you  will  find  that  the 
Spanish  banks  have  no  finer  quarters  than  the  London 
County  and  Westminster  Bank. 

Another  British  enterprise  strongly  intrenched  in 
Spain  is  the  Ebro  Company,  founded  by  the  late  Doc- 
tor Pearson,  who  went  down  on  the  Lusitania  and  who 
was  a  real  empire  builder.  The  Ebro  Company  devel- 
oped immense  water  power  and  electric  railway  inter- 
ests in  Mexico  and  is  duplicating  those  activities  in  the 
vicinity  of  Barcelona  and  other  large  cities. 

Spain  is  well  worth  developing.  She  has  a  greater 
variety  of  minerals  than  the  United  States.  They 
remain  unexploited  because  the  Spaniard  has  very  little 
confidence  in  his  own  country.  When  he  invests  he 
always  employs  his  money  abroad.  As  a  result  French, 
British  and  Belgian  money  built  the  Spanish  railroads, 
while  German  capital  developed  the  water  power  and 
the  steel  industry,  especially  near  Bilbao. 

Concessions  are  the  curse  of  mining  in  Spain,  as  you 
will  now  see.  A  bankrupt  member  of  the  nobility  gets 
the  right  to  operate  a  property.  Instead  of  forming 
a  company  he  sells  the  privilege,  which  is  then  hawked 
from  one  group  to  another.  It  becomes  a  rolling  stone 
that  gathers  nothing  but  abuse  from  the  various  vic- 
tims. Out  of  three  thousand  coal-mine  concessions 
issued  during  the  past  five  years  less  than  two  hundred 
have  been  worked. 

Spain  needs  coal.  Her  Austrian  fields  produce  only 
a  very  inferior  quality  of  fuel,  and  it  is  not  for  export. 
The  country  that  can  produce  and  ship  coal  to  France, 


THE  GERMAN  IN  SPAIN  199 

Italy  and  Spain  will  be  the  country  bound  by  the 
strongest  economic  ties.  It  shows  the  way  to  one 
strong  post-war  relationship  with  the  Spaniard. 

If  we  do  get  busy  in  Spain  it  will  be  with  a  new 
Spain,  despite  Madrid's  pisturesque  contrast  of  ancient 
oxcarts  creaking  past  the  Ritz  Hotel.  She  has  rolled 
up  the  greatest  gold  reserve  of  her  history.  For  the 
first  time  she  is  a  creditor  nation.  She  is  far  from 
being  supine.  She  has  increased  her  army,  enlarged 
her  munition  factories  and  is  strengthening  her  fortifi- 
cations. Yet  the  Spaniard  is  far  from  bellicose.  All 
the  blood  that  he  wants  to  see  can  be  comfortably 
spilled  at  a  bull  fight.  Nor  is  he  altogether  the  drone 
that  some  Americans  tliink  him.  Two  incidents  will 
show  that  he  can  be  enterprising. 

In  Spain  the  signal  for  the  departure  of  a  train  Is 
made  by  the  ringing  of  a  bell  which  hangs  over  the 
door  of  the  waiting  room  of  the  station.  A  Spanish 
salesman  had  a  limited  time  in  a  small  town  and  he 
wanted  to  catch  a  certain  train.  To  make  certain  that 
he  would  make  it  he  unhooked  the  bell  from  its  place 
and  took  it  with  him  on  his  business  rounds.  The  con- 
ductor, a  creature  of  habit,  serenely  held  the  train 
until  the  salesman  restored  the  bell  and  rang  it. 

Spain  is  creating  new  industries.  I  traveled  from 
Barcelona  to  Madrid  with  a  Spaniard  who  told  me  that 
he  had  always  worn  khaki  in  summer.  During  a  trip 
to  Paris  last  spring  he  went  to  a  large  shop  to  order 
three  or  four  suits,  which  he  wanted  at  once.  He  was 
amazed  when  the  salesman  said :  *T  am  sorry  that  we 
cannot  accommodate  you.     We  must  order  the  goods 


200  PEACE  AND  BUSINESS 

from  Spain."  On  account  of  the  tremendous  demands 
that  the  armies  are  making  on  French  and  British 
khaki  factories,  Spain  has  had  to  develop  her  own. 
They  are  a  factor  in  the  national  trade  now. 

Doing  business  in  Spain  is  a  real  adventure.  Unless 
you  start  right  you  are  booked  for  all  kinds  of  trouble. 
Wherever  the  uninformed  alien  seeking  to  establish 
trade  relations  turns  he  encounters  some  obstacle,  tem- 
peramental or  acquired,  that  will  ruffle  his  temper  or 
tap  his  pocket-book.  Since  graft  is  almost  as  old  as 
Spain  herself,  it  naturally  follows  that  the  way  to  the 
establishment  of  commercial  enterprise  is  beset  with 
meaningless  laws  and  punctuated  with  fees.  In  every 
foreign  company  with  a  declared  capital,  for  example, 
the  manager  must  pay  a  tax  of  ten  per  cent  of  his 
salary,  and  the  employees  five  per  cent. 

No  American  firm  should  think  of  entering  the 
Spanish  field  without  investigating  every  legal  detail 
from  the  Spanish  point  of  view.  This  is  part  of  the 
general  principle  for  successful  foreign-trade  exploita- 
tion, which  may  be  summed  up  under  the  instruction : 
Do  business  in  a  foreign  country  wherever  possible  as 
a  corporation  organized  under  the  laws  of  that  country. 

There  are  five  ways  in  which  a  foreign  company  can 
carry  on  a  business  in  Spain.  The  first  is  to  have  an 
agent,  who  may  be  a  Spaniard.  The  second  is  through 
a  direct  representative  of  the  company,  which  requires 
no  capital,  and  under  the  Spanish  law  no  bookkeeping. 
The  third  is  a  branch  company  with  a  so-called  "de- 
clared capital,"  which  means  that  a  full  set  of  books 


THE  GERMAN  IN  SPAIN  201 


must  be  kept  in  Spanish.  The  person  sent  to  represent 
the  company  must  have  a  full  power  of  attorney  certi- 
fied to  by  the  proper  authorities  in  the  home  office  and 
viseed  by  the  Spanish  consul  there  in  order  that  he 
may  be  accredited  by  the  government  and  civil  author- 
ities. The  fee  for  the  incorporation  of  a  company  with 
a  capital  stock  of  $10,000  is  $300. 

Another  alternative  is  to  start  a  Spanish  anonyme 
company,  which  can  be  formed  by  three  people,  who 
need  not  necessarily  be  Spanish.  Shareholders  are  only 
responsible  to  the  extent  of  their  holdings.  For  a 
$10,000  capitalization  the  cost,  which  includes  lawyer's 
fee,  would  be  approximately  $350.  With  this  company 
a  full  set  of  books  must  be  kept  in  Spanish.  Under 
the  Hispanic  laws  there  is  still  another  way  to  conduct 
trade,  through  what  is  called  a  collective  company, 
which  may  be  organized  by  two  or  more  people,  with 
a  fixed  capital  but  no  shares.  It  really  corresponds  to 
an  old-fashioned  American  partnership.  In  this  type 
of  company  the  providers  of  the  capital  assume  full 
liability  for  all  indebtedness.  In  the  opinion  of  Amer- 
icans who  have  done  business  in  Spain  the  direct  repre- 
sentative arrangement  or  an  anonyme  company  is  the 
most  desirable. 

The  whole  Spanish  trade  field  is  ready  and  waiting 
for  American  enterprise.  Like  many  of  her  fellow 
neutrals,  Spain  tried  to  become  pro-Ally  overnight  the 
moment  that  the  doom-note  for  the  German  was 
sounded.  Trade,  like  sentiment  generally,  follows  the 
flag  of  victory.     The  Spaniards  are  willing  to  forget 


202  PEACE  AND  BUSINESS 

our  little  war  of  1898.  France  has  already  begun  a 
highly-organized  business  campaign  in  the  domain  of 
King  Alfonso,  closely  followed  by  England. 

If  we  are  to  stabilize  our  war-won  foreign  trade  we 
can  rear  one  profitable  bulwark  for  it  in  Spain. 


yi— The  New  Italy 


1WAS  on  my  way  back  from  the  Italian  Front.  All 
day  I  had  watched  the  duel  of  guns  across  the 
Carso.  Now,  after  a  wonderful  sunset  that  flooded 
the  Adriatic  with  fire  and  revealed  Trieste  white  and 
shining  in  almost  dazzling  relief,  night  was  coming  on. 
Already  the  searchlights  licked  the  shell-swept  hills 
with  telltale  tongues  of  radiance. 

My  guide,  an  Italian  captain,  began  to  talk  of  the 
future  Italy.  He  was  a  temporary  officer  whose  com- 
mand of  languages  equipped  him  peculiarly  for  head- 
quarters duty.  In  peace  he  controlled  an  industry  that 
employed  ten  thousand  men  and  women ;  in  war  he  was 
merely  a  cog  in  the  military  machine. 

"No  matter  what  dangers  we  face,  Italy  will  come 
out  of  the  war  more  united,  more  efficient,  and  with  a 
whole  new  economic  future  that  will  make  her  a  world 
trade  factor,"  he  said. 

The  boom  of  cannon  punctuated  his  remarks.  Artil- 
lery, ammunition  and  supply  trains  rattled  up  and 
down  the  road  we  traversed.  We  were  in  the  midst  of 
actual  war.  Yet  he  looked  ahead  to  peace  and  the 
reconstruction  that  would  come  with  it.  What  my 
companion  said  crystallized  the  sentiment  of  the  New 

203 


204  PEACE  AND  BUSINESS 

Italy.  It  was  the  voice  of  a  nation  being  remade  In 
the  crucible  of  conflict. 

The  high  hope  uttered  on  the  edge  of  the  maelstrom 
of  war  has  found  realization  in  peace.  Italy  emerged 
from  the  great  struggle  to  conquer  German  militarism 
with  a  bigger  basket  of  the  spoils  of  war  than  any 
other  allied  people.  She  got  much  more  than  she  ex- 
pected. With  Trieste,  Gorizia — practically  the  whole 
mastery  of  the  Adriatic — she  is  a  new  and  vital  force 
in  world  reconstruction. 

In  the  thrill  of  our  own  part  in  the  war  in  France 
and  the  glamour  of  kinship  with  England  we  are  very 
apt  to  forget  that,  with  the  possible  exception  of  Ger- 
many, no  European  country  has  so  strong  an  actual 
racial  link  with  the  United  States  as  Italy.  We  owe 
her  much.  In  the  first  place,  it  was  an  Italian  who  dis- 
covered America.  Secondly,  millions  of  her  citizens 
live  and  work  in  our  midst.  Their  energy  is  written 
on  endless  highways,  far-flung  railway  mileage,  tun- 
nels and  skyscrapers  without  number.  There  are  more 
Italians  In  and  about  New  York  than  In  Rome.  During 
the  year  preceding  the  war  nearly  300,000  immigrants 
left  the  shores  of  Italy  to  take  refuge  upon  our  own. 
More  than  2,500,000  Italians  call  America  home.  To 
the  average  Italian  the  whole  world  outside  his  native 
country  begins  and  ends  with  the  United  States.  It  Is 
the  land  of  promise;  often  the  field  of  rich  fulfillment. 

When  I  was  at  the  Italian  Front  it  was  no  infre- 
quent experience  to  have  a  private  soldier  step  up, 
salute  and  say:  'T  helped  to  build  the  New  York 
Subway,"  or  "I  worked  on  the  Hudson  River  Tube." 


THE  NEW  ITALY  205 

One  day  at  Gorizia  a  superb-looking  young  sergeant, 
who  resembled  a  Gascon  knight  in  his  steel  helmet,  ap- 
proached me  with  a  smiling  face  and  said :  "My  wife 
and  children  are  at  Warren,  Ohio,  my  brother  is  in  the 
first  American  draft,  and  I  am  going  back  to  the 
United  States  if  I  come  out  of  the  war  alive." 

This  typical  confession  shows  how  close  is  the  physi- 
cal relationship  between  two  countries  that  industrially 
scarcely  understand  each  other  and  that  in  a  big  busi- 
ness way  could  have  much  in  common.  What  is  the 
future  of  Italy?  What  can  we  do  to  establish  an  en- 
duirng  economic  kinship  with  her?  What  are  the  con- 
crete opportunities  for  American  trade? 

Before  we  go  into  economics,  however,  we  must 
first  take  a  swift  survey  of  the  human  and  historic 
approach  to  that  great  hour  when  Italy  broke  away 
from  the  Triple  Alliance  and  cast  her  lot  with  the 
Allies.  Just  as  it  is  impossible  to  estabhsh  trade  in 
France  without  knowing  the  French  people  and  their 
needs,  so  is  it  equally  impossible  to  get  an  adequate 
conception  of  what  commercial  Italy  means  to  us  with- 
out knowing  her  antecedents  or  comprehending  the 
Germanic  grip  upon  her. 

To  begin  with,  the  average  untraveled  American  is 
too  apt  to  look  upon  Italy  only  as  a  place  of  the  past, 
as  the  treasure  house  of  art,  the  sanctuary  of  an  im- 
mortal romance  that  breathes  of  Beatrice  and  yet  is 
sinister  with  the  intrigue  of  Borgia.  For  decades  this 
was  true.  Italy  drowsed  in  the  reflected  glory  of  other 
days.  She  was  literally  oppressed  by  her  traditions. 
But  she  was  not  alone  in  that  luxurious  dissipation. 


2o6  PEACE  AND  BUSINESS 

We  duplicated  it  in  our  own  South.  One  reason  why 
the  whole  region  on  the  other  side  of  Mason  and 
Dixon's  line  stood  industrially  still  for  years  after  the 
Civil  War  was  that  it  dreamed  and  lived  "the  good 
old  days."  The  people  in  power  were  of  a  departed 
generation.  The  moment  they  awoke  to  the  realities 
of  the  strenuous  and  practical  hour  in  which  they  lived, 
shook  off  costly  sentimentality,  and  thought  of  the 
future  they  became  efficient  and  prosperous. 

So  with  Italy.  So  long  as  the  country  remained  a 
glorified  art  gallery  and  was  content  to  specialize  in 
tenors  and  tourists,  she  was  a  back  number  in  the  cate- 
gory of  progress.  As  soon  as  she  adopted  German 
methods  of  commercial  organization  she  found  a 
greater  glory  in  Marconi  than  in  Petrarch.  She  began 
to  print  the  reproduction  of  a  modern,  standardized 
motor  factory  instead  of  the  Pantheon  on  her  picture 
postcards. 

Rome  wanted  an  up-to-date  tramway  system,  so  she 
bored  a  tunnel  under  her  famous  ruins.  The  archae- 
ologists howled  with  horror  at  the  sacrilege,  but  the 
service  was  improved.  This  is  the  evolution  of  Italy. 
She  has  a  virile  and  animated  present,  and  with  it  is 
linked  the  promise  of  a  rich  future.  The  glories  of 
Mazzini  and  Garibaldi  are  linked  with  the  achievements 
of  Pirelli  and  Perrone.  Realism  has  succeeded  Ro- 
mance. 

It  was  the  poet  D'Annunzio  who  uttered  the  eloquent 
and  ringing  trumpet  call  that  roused  Italy  to  the  break 
with  Austria.  The  picture  of  the  dramatist,  wearing 
the  uniform  of  an  aviation  officer  and  standing  on  the 


THE  NEW  ITALY  207 

balcony  of  a  hotel  in  Rome  urging  the  nation  to  fight, 
is  the  incarnation  of  the  Italy  that  is.  Thought  and 
action  have  been  transformed  by  the  war. 

We  have  a  curious  and  little-known  comradeship 
with  Italy  in  the  fact  that,  like  the  United  States,  she 
has  a  North  and  a  South,  with  as  distinct  a  boundary 
line  as  ever  divided  Yankee  Land  from  Dixie  Land. 
She,  too,  has  her  conflict  of  tongue  and  temperament. 
She  is  a  melting  pot.  It  would  be  difficult  to  find  a 
country  of  wider  racial  contrasts.  The  industrialized 
North  is  the  stronghold  of  commerce,  peopled  by 
hardy,  industrious  and  persevering  clans.  In  the  South 
are  the  languorous,  who  would  rather  raise  olives  and 
immigrants  than  become  part  and  parcel  of  the  national 
unity.  They  are  the  prey  of  politics,  the  victims  of 
absent  landlords. 

Some  of  us  look  upon  the  Italian  as  a  "wop,"  a 
"dago"  or  any  other  thing  that  you  may  call  the  ditch 
digger  from  the  southern  provinces,  because  he  hap- 
pens to  be  the  type  with  which  we  are  most  familiar. 
Yet  not  every  Italian  wears  overalls  and  sweats  mud. 
And  you  will  find  the  Italian  people  proud  and  sensi- 
tive— attuned  to  the  fine  things.  Huxley  once  said  that 
the  Italian  brain  was  the  keenest  in  the  world.  When 
you  meet  the  leaders  of  the  war  you  realize  that  he 
was  not  wrong. 

Remember,  too,  that  the  Italian  is  a  worker.  Wher- 
ever he  has  labored  he  has  taken  root;  he  generally 
becomes  a  good  citizen. 

The  moment  you  begin  to  study  Italian  business  you 
come  to  grips   with   Germany  because  Germany  is 


2o8  PEACE  AND  BUSINESS 

Italy's  commercial  mother.  The  mailed  fist  that 
dragged  the  world  into  bloody  physical  war  had  no 
more  fitting  prototype  than  the  iron  economic  heel  that 
pressed  down  on  Italy.  The  land  that  produced  Chris- 
topher Columbus  has  been  the  favorite  stamping 
ground  of  German  business  penetration.  It  will  be  a 
difficult  task  to  uproot  her. 

How  did  Germany  forge  the  economic  shackles  on 
Italy?  There  was  a  definite  reason  which  you  must 
know  in  order  to  understand  fully  the  why  and  the 
wherefore  of  the  Teutonic  domination  of  Italian 
finance  and  industry.  In  England  and  France  it  was 
comparatively  easy  to  wipe  out  the  German  influence 
in  business  at  the  beginning  of  the  war.  With  Italy 
it  was  more  difficult.  The  vast,  secret,  and  relentless 
ramifications  of  German  commercial  intrigue  impreg- 
nate the  whole  national  body  of  business.  To  tear 
them  out  at  once  would  rend  the  structure  asunder.  It 
would  be  business  suicide.  This  is  the  reason  why 
Italy  as  a  nation  has  had  no  inherent  antagonism  to- 
ward Germany,  why  she  delayed  going  to  grips  with 
her,  why  the  task  of  emancipation  from  economic  serf- 
dom will  be  as  colossal  as  winning  the  war  itself.  I 
do  not  see  how  she  can  ever  be  free  without  American 
help. 

Up  to  the  war  Italy  and  Germany  were  as  close  as 
two  peas  in  a  pod.  It  was  a  mateship  born  of  a  com- 
mon dream  of  expansion.  The  German  Empire  and 
United  Italy  were  practically  framed  by  the  same 
statesmanship.  Bismarck,  unifier  of  modem  Germany, 
had  as  colleague  the  brilliant  Cavour,  Italy's  greatest 


THE  NEW  ITALY  209 

statesman.  What  Is  now  the  Italian  Kingdom  was  a 
mere  group  of  states  before  the  Franco-Prussian  War. 
France  might  have  become  their  foster  mother  and 
welded  them  into  a  sisterhood  that  would  have  been  a 
worthy  ally.  But  France  had  always  rubbed  Italy  the 
wrong  way.  The  weakness  and  cupidity  of  Napoleon 
III  and  his  colleagues,  expressed  by  the  seizure  of 
Nice,  Savoy  and  Tunis,  alienated  Italy  and  shattered 
her  confidence.  England  was  indifferent,  so  Italy 
turned  instinctively  to  the  Prussian  giant  then  emerg- 
ing out  of  blood  and  iron  into  a  world  power  for  the 
first  time. 

Cavour  and  those  who  followed  him,  hawked  Italy's 
ambition  for  national  unity  and  trade  expansion 
throughout  Europe.  The  only  willing  ear  was  that  of 
Prussia.  When  France  ceased  to  be  a  factor  in  Italy 
with  her  collapse  before  Prussia,  the  hour  of  Italian 
coalition  struck.  The  year  1870  therefore  witnessed 
the  birth  of  the  greater  Germany  and  greater  Italy. 
Out  of  this  kinship  of  a  common  imperial  birthday 
naturally  came  the  close  economic  relation.  It  ex- 
plains everything. 

Thus  Germany  the  Empire,  and  Italy  the  Federation, 
stepped  into  the  sun  at  precisely  the  same  hour,  one  to 
a  militaristic  destiny  that,  like  a  twentieth-century 
Samson,  shook  the  temple  of  Peace  to  its  fall  and  fell 
with  it!  the  other  to  a  serene  and  constructive  career 
among  the  nations  of  the  earth.  Germany  chose  con- 
suming imperialism;  Italy  put  her  faith  in  national- 
ism. This  is  the  vital  difference  today  between  the 
two  peoples. 


2IO  PEACE  AND  BUSINESS 


Why  did  Italy  join  the  Triple  Alliance  and  ally 
herself  with  her  ancient  enemy,  Austria,  whose  career 
was  one  continuous  purloining  of  Italian  territory, 
from  the  Trentino  to  the  Adriatic?  Simply  because 
the  other  nations  would  not  have  her.  France  was 
linked  with  Russia  and  wanted  the  control  of  the 
Mediterranean;  Italy,  for  trade  and  territorial  reasons, 
had  to  dominate  the  Adriatic.  Single-handed,  this 
was  impossible.  She  followed  the  line  of  least  resist- 
ance and  joined  with  the  Hapsburgs,  whose  greedy 
eyes  were  also  on  those  storied  waters.  It  was  easier 
and  better  to  have  their  nominal  friendship  than  their 
avowed  hostility. 

All  the  while  Germany  was  marching  to  the  steward- 
ship of  Continental  Europe.  The  genius  that  had 
welded  Prussia,  Saxony,  Bavaria  and  Wurtemberg 
into  political  unity  beheld  the  vision  of  a  world  eco- 
nomic empire.  Now  began  the  affinity  of  German 
economcis  and  politics.  It  was  this  linking  up  of 
finance  and  industry  to  statesmanship  that  launched 
the  world-wide  campaign  for  Teutonic  commercial 
control.  The  insidious,  ceaseless  and  universally  vigi- 
lant institution  known  as  German  economic  penetra- 
tion came  into  being.  Its  chancellery  was  the  German 
Foreign  Office;  its  capital  stock  was  intrigue  joined 
with  ready  money;  its  secret  service  was  embodied  in 
nearly  every  German  salesman,  no  matter  where  he 
went;  the  government  was  full  partner  in  the  enter- 
prise and  the  whole  globe  was  the  field  of  operation. 

German  economic  penetration  was  in  full  swing 
when  Italy,  through  Crispi,  sought  German  help.    She 


THE  NEW  ITALY  211 


was  an  economic  foundling  on  the  doorstep  of  Europe. 
She  had  Httle  cash  and  less  credit.  The  great  mass 
of  her  people  were  wedded  to  the  soil  and  content  with 
a  pittance.  The  dissatisfied  emigrated  to  the  United 
States  or  elsewhere.  Italy  became  the  business  pupil 
of  Germany.  She  offered  her  country  as  the  school- 
room, little  dreaming  that  the  birch  rod  would  become 
the  big  stick.  The  canary  began  to  play  with  the  cat. 
Before  many  years  had  passed  the  bird  was  inside  the 
animal. 

The  Kaiser  became  the  exalted  advance  agent  of 
this  militant  business  aggression.  He  made  frequent 
visits  to  Italy.  On  one  of  his  trips  occurred  an 
amusing  but  none  the  less  significant  incident:  The 
one-time  All-Highest  went  to  see  some  archaeological 
excavations.  With  what  seemed  to  be  a  touch  of  im- 
perial humor  he  ordered  cakes  of  the  royal  soap  to  be 
distributed  among  the  workers.  The  next  week 
German  salesmen  appeared  in  the  community  selling 
the  identical  article  that  had  been  bestowed  with  such 
kingly  grace.  In  other  words,  the  Emperor  had  simply 
been  a  glorified  sample  distributor. 

Italy  built  up  a  big  commerce  but  it  was  German- 
controlled;  the  North  bristled  with  industry,  but  it 
mainly  used  German  machinery  and  was  in  charge  of 
German  experts;  her  banks  were  owned  by  Italian 
stockholders  but  dominated  by  German  financiers;  her 
ships  sailed  the  seven  seas,  but  under  the  green,  white 
and  read  of  the  Italian  flag  was  always  the  unseen  but 
indelible  black,  white  and  red  of  Germany. 

All  this  subserviency   grew   out  of   the  sad    fact 


212  PEACE  AND  BUSINESS 

that  when  Italy  bared  her  economic  bosom  to  Germany- 
she  did  not  reckon  with  the  thing  that  is  German  trade 
ambition.  In  business  as  in  war  German  might  was 
right. 

Almost  before  she  realized  it  Italy  had  signed  away 
her  commercial  future.  She  became  the  vassal  of  a 
business  Prussianism.  Instead  of  gaining  economic 
independence  she  was  delivered  hand  and  foot  into  the 
most  uncompromising  of  all  slavery — the  bondage  of 
wealth. 


THE  NEW  ITALY  213 


II 

The  story  of  Germany's  conquest  of  Italy  is  one  of 
the  most  remarkable  trade  adventures  in  all  history. 
Its  first  real  outpost  was  reared  with  finance.  Italy 
needed  a  great  bank,  and  Germany  filled  that  need  in 
characteristic  fashion.  In  Berlin  were  those  gigantic 
engines  of  development,  the  Deutsche  and  Dresdener 
Banks  and  the  great  house  founded  by  Bleichroeder, 
the  Disraeli  of  German  finance.  Under  their  direction, 
but  more  particularly  with  the  patronage  of  the  latter, 
the  Banca  Commerciale  Italiana  was  started  at  Milan. 
When  this  bank  threw  open  its  doors  in  1895  the  drive 
wheel  of  the  power  plant  that  was  to  energize  a  whole 
new  Teutonic  commercial  ascendancy  was  started. 
Thenceforth  that  marble  palace  in  Lombardy  was  to 
be  the  real  capital  of  Italian  commerce.  The  name  of 
this  bank  before  the  war  was  synonymous  with 
German  industrial  authority. 

The  beginning  was  interesting.  Germany  seldom 
made  mistakes  with  her  imperial  trade  policy.  Though 
Italy  had  come  to  her  hat  in  hand,  she  knew  Italy's 
needs  long  before  they  were  voiced.  The  sleepless 
system  of  German  trade  espionage — as  necessary  to 
trade  development  as  it  was  to  the  military  machine — 
had  Italy  charted  and  diagramed,  ready  for  exploita- 
tion. Germany  began  her  conquest  of  Italy  in  the 
ItaUan  language  and  with  Italianized  Germans.  She 
picked  the  two  men  best  equipped  to  be  both  path- 


214  PEACE  AND  BUSINESS 


finders  and  builders.    They  were  Otto  Joel  and  Fred- 
erick Weil. 

In  the  middle  of  the  seventies  Joel  and  Weil,  then 
in  their  teens,  left  their  homes  in  Germany  to  make 
their  fortunes  in  Italy.  They  secured  positions  with 
the  Banca  Generale  of  Genoa,  where  they  learned  the 
banking  business.  They  also  learned  a  great  deal  about 
Italy  and  the  ItaHan  temperament.  The  Banca  Gen- 
erale failed  just  about  the  time  that  Wilhelmstrasse  in 
Berlin  decided  to  establish  a  bank  in  Italy.  Through 
the  underground  system  which  reached  from  every 
patriotic  German  throughout  the  world  back  to  the 
capital,  Joel  and  Weil  were  known  and  therefore 
booked  for  service.  They  were  put  in  charge  of  the 
baby  bank  at  Milan;  they  made  it  the  financial  giant 
of  Italy. 

Joel  was  the  strong  man  of  the  combination.  He 
was  almost  Lincoln-like  in  appearance  and  had  some 
of  the  great  emancipator's  wit,  foresight,  shrewdness 
and  humor.  He  wielded  a  power  such  as  a  combination 
of  J.  P.  Morgan,  James  Stillman,  George  F.  Baker  and 
Thomas  F.  Ryan  would  have  spelled.  These  Americans 
represent  interests  that  sometimes  war  on  each  other. 
Joel,  on  the  other  hand,  was  head  and  front  of  a  trust 
that  brooked  no  opposition — certainly  not  for  many 
years. 

The  Banca  Commerciale  Italiana  began  with  a  capi- 
tal of  five  million  lire,  or  a  million  dollars  in  American 
money.  This  capitalization  grew  to  a  hundred  and 
fifty  million  lire.  Now  the  interesting  and  illuminat- 
ing  feature  of  this  capitaHzation — and  it  applies  to 


THE  NEW  ITALY  215 


nearly  all  German-endoAved  enterprises  in  Italy — is 
this :  Practically  tlie  only  German  money  actually  put 
into  the  bank  was  the  original  investment.  Just  as  soon 
as  the  business  expanded,  this  capital  was  withdrawn 
and  supplanted  with  Italian  money.  The  power  and 
prestige  of  the  institution,  however,  remained  with  the 
German  director  and  his  associates  and  were  employed 
for  German  promotion.  This  was  the  backbone  of 
German  penetration  in  Italy. 

Why  did  the  Italian  stockholders  stand  for  this 
procedure,  you  naturally  ask?  Simply  because  the 
average  Italian  stockholder  is  no  different  from  any 
other  stockholder  the  world  over.  So  long  as  he  gets 
his  dividends  regularly  he  does  not  concern  himself 
about  management.  This  kind  of  director  who  does 
not  direct  permitted  the  abuse  of  corporate  power  that 
led  to  the  insurance  and  kindred  exposures  in  the 
United  States.  Italy  had  no  Hughes  to  put  the  probe 
into  dizzy  finance.  The  Banca  Commerciale  Italiana 
was  so  intrenched  in  power  that  its  mastery  of  the 
Italian  situation  was  complete.    It  could  do  no  wrong. 

Now  you  can  understand  the  astounding  fact  that 
though  Germany  was  the  economic  master  of  Italy  her 
actual  cash  investment  in  the  country  was  less  than  that 
of  any  other  nation  doing  business  there,  including 
Switzerland.  According  to  the  most  reliable  statistics 
prior  to  the  war  the  investments  of  foreign  countries 
were  approximately  as  follows  :  Belgium,  $37,000,000; 
France,  $30,000,000;  England,  $22,000,000;  Switzer- 
land, $16,000,000;  and  Germany,  $6,000,000.  Yet 
with  this  paltry  $6,000,000  she  was  able  to  influence 


2i6  PEACE  AND  BUSINESS 

and  control  or  have  some  kind  of  interest  in  nearly  all 
the  783  stock  companies  in  Italy,  whose  combined 
capital  was  not  less  than  $900,000,000. 

To  be  specific — and  I  use  the  figures  given  to  me 
by  the  present  head  of  the  bank — the  institution 
has  definitely  aided  in  the  organization  and  control 
of  19  chemical  and  electrochemical  industries,  25 
engineering  companies  and  shipyards,  five  mineral 
companies,  21  textile  industries,  24  transporta- 
tion lines,  nine  building  and  building-materials  indus- 
tries, 16  general  industries,  three  huge  concerns  for 
the  production  of  foodstuffs,  and  four  hotel  com- 
panies that  operated  everywhere. 

How  was  this  supremacy  achieved?  Study  Italian 
financial  and  industrial  enterprise  and  you  soon  get 
the  answer.  No  man  or  group  of  men  in  Italy  could 
make  corporate  headway  without  the  aid  or  consent 
of  the  Banca  Commerciale  Italiana.  I  will  tell  you 
why.  The  bank  was  the  Italian  partner  of  the  famous 
AUgemeine  Elektrische  Gesellschaft  of  Berlin,  better 
known  as  the  A.  E.  G. — the  great  German  electric- 
machinery  trust  that  could  give  American  monopoly 
cards  and  spades  and  beat  it  in  the  great  game  of 
business  freeze-out.  If  you  know  anything  about 
German  business  you  know  that  the  A.  E.  G.,  like  the 
Hamburg-American  Line,  the  North  German  Lloyd 
Steamship  Line  and  the  Potash  Trust,  was  among  the 
Kaiser's  business  pets.  It  operated  in  every  Conti- 
nental country  and  usually  got  what  it  wanted.  It  was 
literally  the  dynamo  of  Europe. 

The  Banca  Commerciale  Italiana  put  the  A.  E.  G. 


THE  NEW  ITALY  217 

into  Italy.  Otto  Joel  made  himself  president  of  the 
Italian  company,  and  Weil  was  an  associate.  It  was 
financed,  of  course,  by  the  bank,  which  means  that  it 
became  a  province  of  the  German  industrial  hierarchy. 

What  happened  ?  I  can  perhaps  best  illustrate  with 
a  concrete  story : 

A  group  of  men  got  together  at  Milan  and  organized 
a  company  to  supply  electric  power  in  a  certain  district 
in  the  north  of  Italy.  They  went  to  the  Banca  Com- 
merciale  Italiana  to  get  the  capital. 

After  they  had  stated  their  case  and  shown  how 
profitable  the  enterprise  would  be,  the  bank  official 
said :    "We  shall  be  very  glad  to  finance  the  scheme." 

"Good !"  replied  the  promoters.  "How  soon  can  we 
get  the  money?" 

"Have  you  arranged  to  get  your  electrical 
machinery?"  asked  the  banker. 

"We  have  made  a  very  excellent  contract  with  a 
French  house,"  answered  the  spokesman. 

"I  am  extremely  sorry  to  hear  this,"  retorted  the 
banker.  "In  that  circumstance  we  cannot  let  you  have 
the  capital." 

"But  why?"  asked  the  promoter. 

"Because  we  never  lend  money  to  electrical  enter- 
prises without  providing  the  electrical  machinery 
ourselves,"  was  the  explanation. 

The  promoters  had  to  have  the  money.  With  it  was 
a  string  that  tied  up  a  contract  with  the  A.  E.  G.  for 
all  the  machinery  needed.  German  capital  is  always 
exacting. 

In  this  episode,  which  I  could  duplicate  by  the  score, 


2i8  PEACE  AND  BUSINESS 

is  revealed  the  secret  of  the  influence  wielded  by  the 
Banca  Commerciale  Italiana.  What  was  true  of  the 
electrical  industry  was  true  of  nearly  every  other 
industrial  enterprise.  When  the  bank  did  not  lend 
money  it  obtained  voting  control  by  paying  a  certain 
sum  to  represent  individual  stockholders  at  directors' 
meetings.  Thus  corporate  plans  and  prospects  became 
an  open  book.  The  Banca  Commerciale  Italiana  had 
its  finger  in  every  business  pie;  to  every  loan  it  made 
was  attached  some  reservation  that  produced  business 
for  German  firms  and  put  money  into  German  banks 
and  German  pockets.  Alongside  its  activities  the 
Standard  Oil  Company  in  its  palmiest  days  as  trade 
autocrat  was  an  innocent  child,  while  the  so-called 
American  Money  Trust,  with  its  system  of  interlocking 
directorates,  was  nothing  less  than  an  altruistic 
institution. 

The  control  of  the  electric  industry  carried  with  it  a 
peculiar  prestige.  Italy  has  no  coal  mines.  Even  before 
the  war  the  problem  of  fuel  supply  was  difficult.  Now 
it  is  acute.  The  industries  of  the  country  had  to  turn 
to  water  power.  Under  nonnal  conditions  Italy  has 
has  an  estimated  total  water  power  of  nearly  five 
million  horse  power.  The  Germans  began  to  exploit 
it,  and  for  a  variety  of  reasons  :  First  of  all,  it  meant 
the  employment  of  German  electrical  machinery; 
second,  it  enlisted  German  engineers ;  third,  and  more 
vital  to  Teutonic  trade  ambition,  the  more  independent 
Germany  made  Italy  of  British  coal  the  greater  would 
be  Italy's  dependence  upon  the  output  of  German 
forges  and  factories.     With  the  Banca  Commerciale 


THE  NEW  ITALY  219 

Italiana  to  finance,  and  the  A.  E.  G.  to  provide  equip- 
ment, the  drive  to  estabHsh  and  develop  water  power 
succeeded  admirably. 

The  first  sign  of  industry  that  I  saw  when  I  crossed 
the  frontier  from  France  to  Italy  was  an  electrical 
power  station  in  the  Alps,  equipped  with  German 
machinery,  generating  power  through  German  wire 
and  on  iron  posts  made  in  Germany.  It  told  the  whole 
story.  Though  the  Germans  were  nominally  gone, 
their  works  remained  behind. 

Electric-power  control  gave  Germany  still  another 
vital  weapon.  When  you  sell  electricity  you  have 
access  to  every  man's  house.  This  means  that  the 
agents  of  the  Electric  Trust  had  the  complete  and 
undisputed  run  of  the  country.  Arsenal,  fortress, 
factory  and  home  alike  came  under  the  scrutiny  of 
German  commercial  development,  which  was  the  full 
working  partner  of  military  ambition. 

I  can  give  you  no  more  convincing  evidence  of  the 
completeness  of  the  espionage  system  before  the  war 
than  to  repeat  what  an  Italian  officer,  recruited  from 
industry,  told  me  at  Udine,  the  charming  little  town  in 
the  mountains  which  was  once  the  general  head- 
quarters of  the  Italian  Supreme  Command.  Summed 
up  it  was  this:  Ninety-five  per  cent  of  the  electric 
horse  power  in  the  province  of  Venetia,  which  touches 
the  Austrian  frontier  and  which  subsequently  became 
the  line  of  attack  at  the  outbreak  of  hostilities,  was  in 
German  hands.  Before  a  blow  was  struck  the  enemy 
knew  every  square  yard  of  land  and  had  in  its  pes- 


220  PEACE  AND  BUSINESS 

session  the  plans  of  every  structure  of  the  shghtest 
mihtary  importance. 

The  Banca  Commerciale  ItaHana  did  its  job  thor- 
oughly. It  not  only  influenced  politics  but  reached  out 
and  annexed  the  press.  Read  any  account  of  the 
Germanic  commercial  invasion  of  Italy — and  I  refer 
you,  for  example,  to  a  chapter  in  William  K.  Wallace's 
Greater  Italy — and  you  will  see  how  easily  it  was 
accomplished.  Every  one  of  the  corporations  controlled 
by  the  bank  was  compelled  to  take  a  definite  share  of 
the  capital  stock  of  newspapers  or  periodicals  in  the 
vicinity  in  which  it  operated.  This  established  one 
sort  of  control.  In  addition,  many  publications  received 
subsidies  from  business  in  the  form  of  advertising 
contracts.  Certain  German  industries  in  Italy  had  their 
own  journals.  When  an  Italian  bank  or  an  Italian 
corporation  so  far  forgot  itself  as  to  venture  on  its 
own,  this  venal  and  subsidized  press  let  loose  such  a 
torrent  of  criticism  and  abuse  that  it  was  almost  glad 
to  be  assimilated  on  any  terms. 

Italy  realized  her  serfdom,  yet  was  helpless.  Long 
before  the  war  began  Preziosi,  one  of  the  foremost 
Italian  writers  on  economics,  in  commenting  on  the 
dictatorship  of  the  Banca  Commerciale  Italiana,  made 
the  following  statement  in  his  standard  work  on  the 
German  conquest  of  Italy: 

"The  great  calamity  of  Italy  is  that  this  bank  not 
only  controls  the  navigation  companies,  the  metallur- 
gical and  manufacturing  industries,  but  likewise  the 
greater  part,  if  not  all,  of  the  industrial  enterprises 
which  specialize  in  the  manufacture  of  armaments. 


THE  NEW  ITALY  221 

This  explains  not  only  the  power  of  the  bank,  but  also 
its  policy. 

Such  was  the  power  of  the  Banca  Commerciale 
Italiana.  From  it  radiated  the  influence  that  molded 
public  opinion  and  shaped  industry.  If  the  German 
Ambassador  to  Italy  had  actually  made  his  head- 
quarters within  its  walls  he  would  have  had  a  fitting 
background  for  his  labors.  It  was  the  real  embassy, 
because  it  deployed  dollars  instead  of  diplomacy. 

I  went  to  Milan  to  see  this  one-time  financial 
octopus  whose  tentacles  reached,  and  still  extend, 
throughout  all  Italy.  Its  magnificent  building  broods 
like  a  medieval  palace  over  the  Piazza  de  la  Scala.  It 
has  a  picturesque  setting.  In  front  looms  the  statue  of 
the  great  Leonardo  da  Vinci.  On  one  side  is  the 
famous  Scala  Opera  House  with  its  rich  traditions  of 
art;  on  the  other,  by  curious  irony,  is  the  Municipal 
Palace  of  Justice.  Like  the  Bridge  of  Sighs  at  Venice, 
it  has  "a  palace  and  a  prison  on  each  hand." 

Otto  Joel  no  longer  sits  in  the  seat  of  the  mighty — 
he  died  in  1916;  but  in  his  stead  reigns  Guiseppe  L. 
Toeplitz.  He  is  self-made,  like  his  predecessor,  for 
he  rose  from  an  obscure  clerk  to  be  the  successor  of 
the  financial  dictator  of  Italy.  Though  bom  in  Riga 
he  speaks  English  with  a  German  accent. 

"Is  the  German  influence  out  of  the  Banca 
Commerciale  Italiana?"  I  asked  him. 

"Yes,"  he  replied ;  "the  German  stock  ownership  has 
been  reduced  to  considerably  less  than  a  million  dollars. 
We  have  only  Italian  directors  now." 


222  PEACE  AND  BUSINESS 

"Will  the  Germanic  influence  return  to  Italy?"  I 
continued. 

"It  all  depends  upon  what  the  United  States  and 
England  do,"  he  responded.  When  I  pressed  him  for 
an  explanation  he  said :  "After  the  war  Italy  will 
make  a  tremendous  effort  to  increase  her  industrial 
production.  She  will  need  capital.  The  nations  of 
Europe  will  have  great  war  damages  to  repair. 
America,  with  her  vast  resources,  will  be  better  able  to 
lend  than  any  of  her  allies.  No  other  country  has  such 
intimate  and  continuous  relations  as  Italy  with  the 
United  States,  due  of  course  to  the  number  of  Italians 
who  have  gone  to  America.  This  has  brought  about 
sympathy  and  solidarity  between  the  two  countries. 
North  American  capital  therefore  will  not  only  find  a 
ready  and  profitable  investment  in  Italy  in  aiding  the 
economic  development,  but  it  will  be  all  the  more 
welcome  because  the  United  States  enjoys  the  widest 
political  liberty,  and  therefore  in  investing  capital 
abroad  she  will  have  no  political  aims.  If  American 
and  British  capital  does  not  come  to  Italy,  very  natur- 
ally other  countries  must  help  in  the  reconstruction. 

"As  the  world  center  of  commerce  has  now  shifted 
to  the  United  States,  the  Banca  Commerciale  Italiana 
has  established  an  agency  in  New  York  to  assist  in  the 
numerous  questions  of  supply,  transport  and  finance 
involved  in  the  unprecedented  intercourse  between  the 
United  States  and  Italy." 

Mr,  Toeplitz  showed  me  the  bank,  which  is  as  big 
and  as  imposing  as  the  National  City  Bank  in  New 
York.     Gone  was  the  small  army  of  German  clerks 


THE  NEW  ITALY  223 


who  once  sat  under  its  massive  roof.  In  their  stead 
work  Italians  and  Swiss.  With  great  pride  the 
managing  director  told  me  that  the  bank  had  its  own 
electric  plant.  In  a  country  like  Italy,  where  electricity 
is  so  common,  there  is  no  remarkable  installation,  but 
it  took  on  a  peculiar  significance  when  he  said  "We 
are  independent  of  any  mob." 

Let  us  now  go  back  for  a  moment  to  19 14  and  to 
the  day  when  Joel  was  enthroned  and  the  German  sat 
in  the  economic  saddle.  This  commercial  autocracy 
was  merely  one  cog  in  a  many-sided  machine.  An  in- 
cessant propaganda  was  in  action  that  reached 
everywhere  and  touched  everybody.  The  Socialists 
and  the  Pacifists  were  geared  up  to  the  game.  It  is  a 
curious  fact  that  the  more  you  study  German 
propaganda — and  during  the  last  three  years  I  have 
investigated  it  in  eight  different  countries — the  more 
you  find  that  it  always  tries  to  coddle  the  peace  lover. 

What  Germany  did  in  Italy  she  duplicated  in 
varying  degrees  in  Turkey,  Belgium,  Bulgaria, 
England,  France,  Brazil  and  elsewhere.  To  economic 
penetration  was  joined  social  relationship.  It  was  an 
almost  irresistible  combination. 

Then  came  the  war  and  Germany's  frantic  efforts 
to  keep  Italy  neutral.  Never  was  a  nation  so  beset. 
More  than  eighty  thousand  Germans  lived  within  her 
borders — nearly  all  intimately  connected  with  her 
business  life.  Most  of  them  spoke  Italian  and,  follow- 
ing the  traditions  of  social  penetration,  had  inter- 
married into  Italian  families.  Italy  was  still  hypnotized 
with  admiration   for  German  efficiency,  and  looked 


224  PEACE  AND  BUSINESS 

upon  Germany's  army  as  a  model  of  organization.  It 
was  only  when  she  saw  the  madness  that  raped 
Belgium  and  perceived  the  insanity  that  murdered  the 
Lusitania  that  she  realized  that  the  nation  that  had 
done  these  things  would  stop  at  nothing  to  gain  its 
end.  Yet  she  was  bound  hand  and  foot  to  this  modern 
war-mad  Machiavelli !    It  was  a  terrifying  situation. 

When  she  took  stock  of  it  she  found  that  products 
like  iron,  steel,  textiles,  hides  and  leather,  which  she 
could  well  produce  herself,  had  been  driven  from  the 
market  by  German  goods.  Her  merchants  who  dealt 
in  highly  competitive  articles  like  typewriters,  sewing 
machines  and  bicycles  had  grown  accustomed  to  long 
German  credit  or  to  having  large  stocks  shipped  on 
consignment  and  only  paid  for  on  actual  sale.  The 
banking  system  was  under  the  thumb  of  the  Banca 
Commerciale  Italiana  and,  though  it  spoke  Italian, 
was  Germanic  in  scope  and  procedure.  In  other  words, 
Germany  was  the  staff  of  business  life.  What  was 
Italy  to  do? 

I  need  not  rehearse  how  she  went  to  war  on  the 
instalment  plan,  first  with  the  hated  Austria  and  later 
with  Germany.  Even  at  war  Germany  got  the  best 
of  the  economic  deal,  as  this  incident  will  show :  When 
Italy  and  Germany  broke  off  diplomatic  relations  the 
Kaiser  was  eager  to  protect  the  vast  Germanic  inter- 
ests in  Italy.  At  that  time  a  number  of  highly  skilled 
Italian  artisans  lived  in  Germany.  By  a  special  treaty 
— "made  in  Germany,"  I  might  add — the  Imperial 
Government  agreed  to  pay  them  pensions  for  the 
duration  of  the  war  on  the  condition  that  Italy  would 


THE  NEW  ITALY  225 

not  sequester  German  property  In  the  Italian  kingdom. 
How  foxy  was  this  arrangement  is  evidenced  by  the 
statement  made  to  me  in  Italy  that  in  exchange  for 
pensions  which  would  not  exceed  $2,500,000,  Germany 
got  protection  for  approximately  $800,000,000  of 
property  I 


226  PEACE  AND  BUSINESS 


III 

Though  it  lacerated  the  business  body,  the  war 
brought  its  compensations.  Just  as  it  taught  England 
the  supreme  lesson  of  thrift  and  conservation  and 
galvanized  France  into  a  fresh  productive  power,  so 
did  it  put  the  spirit  of  industrial  independence  into  the 
heart  of  Italy.    "War  was  kind." 

Even  while  Germany  was  both  economic  master  and 
taskmaster,  Italy  had  begun  to  rebel  against  the 
Teutonic  tyranny.  Throughout  the  kingdom  untram- 
meled  industrial  enterprise — of,  by  and  for  Italians — 
sprang  into  being.  This  really  national  industry  was 
fostered  by  a  group  of  resolute  and  big-thinking  men 
who  regarded  German  economic  penetration  as  a 
curse  and  the  prosperity  it  begot  as  little  short  of 
prostitution.  These  were  the  men — and  you  shall  now 
know  some  of  them — who  in  their  industrial  patriotism 
enabled  the  nation  to  go  to  war.  Likewise  they  laid 
the  corner-stone  on  which  the  new  Italy  is  being  reared. 

Italy,  as  you  may  remember,  did  not  go  to  war  with 
Austria  until  ten  months  after  the  great  European 
conflagration  started.  One  reason  was  the  very  con- 
siderable body  of  opinion  in  the  kingdom  which  was 
favorable  to  Germany  and  which  resented  dislocation 
of  the  close  economic  bonds.  The  other  was  that  Italy 
was  not  ready  for  war.  She  saw  England  dashing  into 
hostilities  almost  overnight,  ill-prepared  and  con- 
fronted with  the  monster  task  of  providing  equipment 


THE  NEW  ITALY  227 


and  armament  at  breakneck  speed.  Britain,  however, 
was  a  huge  workshop,  backed  up  by  worldwide 
imperial  resources.  Italy  was  anything  but  a  machine 
shop.  Besides,  she  had  no  coal,  and  up  to  that  time 
had  been  almost  entirely  dependent  upon  Germany  for 
her  mechanical  equipment. 

Without  genuine  industrial  patriotism,  which  now 
vied  with  the  war  spirit,  she  would  have  been  compelled 
to  remain  in  bondage.  The  moment  that  Belgium  was 
defiled  that  part  of  Italy  courageous  enough  to  defy 
the  German  industrially  in  peace  turned  grimly  to  the 
job  of  making  ready  to  defy  him  in  war.  The  wheels 
began  to  hum  and  they  sang  a  new  hymn  of  hate.  In 
Turin,  Milan,  Genoa — the  old  citadels  of  German 
power — Italian  industry  leaped  to  the  work  of  re- 
generation. 

Let  me  now  reveal  in  ternis  of  men  and  achievement 
the  industrial  hope  of  Italy — bulwark  of  the  new  order. 
You  will  see  that,  as  in  France,  a  whole  new  race  of 
self-made  captains  of  capital  had  been  created — the 
Latin  prototypes  of  the  Carnegies  and  the  Schwabs  of 
America,  the  Bessemers  and  the  Hadfields  of  England 
and  the  Citroens  and  Mayens  of  France. 

Chief  among  the  industrial  stalwarts  is  Pio  Perrone, 
who  is  the  Krupp  of  Italy — head  of  the  great  Ansaldo 
Munition  Works  near  Genoa.  This  monster  establish- 
ment had  an  interesting  evolution,  first  because  it  was 
one  of  the  pioneers  launched  without  German  aid, 
consent  or  capital;  second  because,  by  a  curious 
circumstance,  it  was  founded  by  two  British  engineers 
as  a  workshop  to  repair  locomotives   used   on   the 


228  PEACE  AND  BUSINESS 

Italian  railways.  For  years  it  was  operated  by  the 
Armstrongs  of  England. 

One  day  the  wide-awake  and  equally  wide-visioned 
Pio  Perrone,  aided  by  his  brother  Mario,  acquired  a 
financial  interest.  They  were  engineers  who  believed 
in  Italy  for  the  Italians.  They  brought  in  undiluted 
Italian  capital  and  surrounded  themselves  with  Italian 
experts.  Before  long  they  were  in  active  competition 
with  Krupp  of  Germany  and  Vickers  in  England.  The 
one-time  repair  shop  expanded  into  a  mighty  plant 
that  builds  battleships,  cruisers,  destroyers,  field 
artillery,  machine  guns  and  motor  cars. 

When  Prusianism  ran  amuck  in  August,  1914,  the 
men  who  conducted  the  Ansaldo  works  did  a  fine  and 
patriotic  thing.  They  knew  that  Germany  would 
employ  every  effort  to  keep  Italy  out  of  the  war,  and 
they  also  knew  that  sooner  or  later  national  self-respect 
would  dictate  a  rupture.  Without  government  contract 
or  government  subsidy  they  started  to  do  their  part  in 
making  Italy  ready.  Realizing  that  the  inevitable  war 
would  strip  Italy  of  her  men,  they  broke  all  Italian 
industrial  precedents  and  hired  women  workers. 
During  the  ten  months  that  Italy  was  neutral  the 
Ansaldo  works  built  more  than  a  thousand  guns  of  all 
kinds  and  laid  down  and  partly  completed  a  small  fleet 
of  warships.  Most  important  of  all,  they  pointed  out 
to  the  government  that,  whatever  contingency  might 
arise,  Italy  had  one  industrial  asset  to  hurl  into  the 
breach. 

When  Italy  did  declare  for  honor  the  Ansaldo 
organization  was  placed  unreservedly  at  the  disposal 


THE  NEW  ITALY  229 


of  the  government.  Its  thousands  of  trained  men  and 
women  workers  became  the  instructors  of  the  hundreds 
of  thousands  of  others  inevitably  drawn  into  the  work 
of  war.  Thus  the  Perrones  were  not  only  patriots  but 
teachers. 

Go  to  the  Ansaldo  works  to-day  and  you  think  you 
are  in  Homestead  or  Bethlehem,  Pennsylvania,  but 
with  this  difference :  Just  beyond  stretch  the  blue,  sun- 
kissed  waters  of  the  Mediterranean,  whose  smiling 
serenity  is  in  striking  contrast  with  the  titanic  energy 
that  shakes  this  vast  industrial  city.  The  smoke  that 
trails  from  its  myriad  stacks  is  the  battle  flag  of  the 
reborn  industrial  Italy  risen  in  protest  against  German 
aggression.  Into  those  majestic  waters  where  once 
the  argosies  of  other  days  sailed  forth  under  silken 
sails  you  behold  grim  gray  war  vessels  sheathed  with 
steel  slipping  down  the  ways.  It  typifies  the  trans- 
formation of  Italy. 

Dominating  the  whole  Ansaldo  establishment  is  the 
lean  Latin  whose  energy  is  limitless.  When  Italy 
takes  her  new  place  among  the  nations  Pio  Perrone  will 
be  one  of  her  leaders.  Full  brother  to  the  Ansaldo 
works  is  the  Fiat  establishment  at  Turin.  Here  you 
have  another  one  of  the  miracles  achieved  by  the 
independent  industrial  Italy.  It  is  a  wonder  tale  of 
development. 

Fifteen  years  ago  three  men  of  Milan,  all  Italians, 
set  up  a  modest  factory  with  a  capital  of  exactly  $5000. 
One  was  a  cavalry  officer;  the  second  was  an  engineer; 
and  the  third  was  a  practical  man  of  affairs.  That 
small  establishment  was  the  nucleus  of  what  is  to-day 


230  PEACE  AND  BUSINESS 

the  largest  automobile  factory  in  Europe  and  what  is 
in  some  respects  the  most  remarkable  example  of 
industrial  self-sufficiency  in  the  world.  The  Fiat 
factory  makes  its  own  steel,  bronze  and  brass.  In  other 
words,  all  that  it  requires  from  the  outside  world  is 
the  raw  material.  The  organization  inside  does  the 
rest. 

Like  the  Ansaldo  company,  the  Fiat  people  prepared 
for  the  war.  When  the  alarm  sounded  they  had  a 
huge  fleet  of  vehicles  ready  for  service.  This  is  why 
Italy  has  been  spared  all  the  difficulty  and  detail  that 
made  England's  war-mechanical-transport  job  so 
complicated.  She  was  able  to  adopt  a  standardized 
motor  truck  with  easily  replaced  and  interchangeable 
parts.  It  has  been  an  inestimable  help  to  the  war 
machine. 

The  Fiat  factory  is  animated  evidence  of  the  fact 
that  Italian  industry  knows  how  to  speed  up.  When  the 
first  great  Italian  offensive  was  launched  the  Director 
of  Transport  of  the  Italian  Army  sent  an  urgent  wire 
to  Turin  saying  that  he  needed  five  hundred  and  fifty 
automobiles  in  a  week.  This  is  an  order  that  would 
have  been  a  facer  for  any  highly  standardized  estab- 
lishment in  the  United  States ;  it  was  a  staggerer  when 
you  realize  that  it  was  for  big  trucks  and  high-power, 
expensive  cars.  The  factory,  however,  met  the 
emergency,  and  the  vehicles  were  delivered  on  time. 

Reflecting  the  new  spirit  of  independent  Italian 
industry  is  the  house  of  Pirelli,  which  has  developed  a 
productive  empire  all  its  own.  It  unfolds  still  another 
romance  of  self-made  success.    In  1872  G.  B.  Pirelli, 


THE  NEW  ITALY  231 

an  electrical  engineer,  won  a  scholarship  at  the 
Polytechnico  of  Milan  for  the  study  abroad  of  new 
industries  for  Italy.  It  was  prior  to  the  advent  of 
Teutonic  economic  penetration. 

Pirelli  had  a  big  vision.  He  saw  the  rubber  industry 
jealously  guarded.  It  was  an  opportunity  for  pioneer- 
ing. With  a  borrowed  capital  of  $35,000  and  with 
twenty  workmen  he  established  a  plant  at  Milan.  He 
imported  from  France  a  rubber  expert,  the  proprietor 
of  a  small  workshop  in  the  suburbs  of  Paris  which  had 
been  destroyed  during  the  Franco-Prussian  War. 
After  a  succession  of  precarious  years  which  tested 
ingenuity  and  resource,  Pirelli,  now  aided  by  his  two 
sons,  Piero  and  Alberto,  definitely  established  a  rub- 
ber industry  in  Italy.  It  was  rapidly  expanded  so  as 
to  include  elastic  thread,  insulated  wires  for  field  tele- 
graph, cables  and  accessories. 

When  the  Italian  Government  decided  to  link  the 
lesser  islands  with  the  mainland  by  a  submarine 
telegraph  cable,  the  Pirellis  undertook  to  supply,  lay 
and  maintain  these  cables,  and  took  the  business  from 
the  British  bidders.  They  erected  the  first  Continental 
factory  for  the  manufacture  of  submarine  cables  at 
Spezia  and  built  a  cable-laying  ship,  the  Citta  di 
Milano.  Since  that  time  the  firm  has  been  conspicuous 
in  the  submarine-cable  Industry,  maintaining  the  old 
lines  laid  down  in  the  eighties  and  opening  up  new 
ones.  It  was  the  Pirellis  who  linked  Italy  with  Libya. 
When  the  motor  age  dawned  they  took  rank  with  the 
arbiters  of  the  European  rubber-tire  business.    Having 


232  PEACE  AND  BUSINESS 

been  extensive  manufacturers  of  bicycle  tires  they  were 
able  to  meet  the  demands  of  self-propelled  vehicles. 

To-day  the  Pirellis  regard  the  v^orld  as  their  field. 
Their  four  works  in  Italy  are  located  at  Milan,  Spezia, 
Bicocca  and  Vercurago ;  they  have  a  branch  at  South- 
ampton, England,  and  still  another  near  Barcelona,  in 
Spain,  Altogether  ten  thousand  men  and  women  are 
in  their  employ.  I  can  give  you  no  better  notion  of  the 
extent  of  their  industry  than  to  say  that  when  I  was 
in  Italy  last  autumn  their  daily  output  was  5000 
pneumatic  and  solid  tires,  1200  kilos  of  electric  wires 
and  cables  a  day.  Each  year  they  produce  3,000,000 
square  meters  of  proofed  cloth.  That  the  new  Italian 
industry  is  alive  to  the  needs  of  the  future  is  attested 
by  the  recent  setting  up  by  the  Pirellis  of  a  laboratory 
of  chemical  and  physicochemical  research  to  be  devoted 
to  the  scientific  study  of  all  problems  related  to  their 
business.  It  is  like  the  Institute  for  Research  estab- 
lished by  George  Eastman  at  Rochester.  It  is  charge 
of  Professor  Bruni,  of  Milan  University,  one  of  the 
most  distinguished  Italian  scientists  of  the  day. 

At  Milan  I  talked  with  Alberto  Pirelli  who  is  of  the 
same  virile  industrial  mold  as  Pio  Perrone.  I  asked 
him  what  he  thought  of  the  future  of  Italian  industry 
with  special  reference  to  American  cooperation.  He 
replied : 

"The  industrial  bane  of  Italy  has  been  German 
economic  penetration.  We  can  shake  off  the  fetters  if 
England  and  the  United  States  will  help  us.  Without 
that  help  Italy  will  again  be  doomed  to  Teutonic 
control  in  the  future.     If  America  makes  a  favored- 


THE  NEW  ITALY  2^? 


0.) 


nation  treaty  with  us,  gives  us  the  raw  products  of  her 
furnaces,  we  can  defy  the  German.  It  is  for  America 
to  decide  whether  she  will  be  with  us  or  against  us. 
Italy  will  welcome  her  aid  in  peace  just  as  she  rejoices 
in  it  in  war." 

In  the  Ansaldo,  Fiat  and  Pirelli  works,  and  in  the 
others  that  I  could  describe,  you  see  the  defense  that 
Italy  is  rearing  to  resist  future  German  trade  assaults. 
These  huge  fortresses  of  industry  have  pointed  the 
way  for  the  lesser  ones.  In  Genoa,  Milan  and  Turin — 
the  three  great  industrial  centers — the  small  manu- 
facturer is  springing  up.  It  is  the  sum  of  the  small 
savings,  that  becomes  the  backbone  of  any  nation 
whether  with  finance  or  industry.  Italy  is  fortifying 
herself  with  this  asset. 

Nor  is  Italian  resource  lacking.  Here  is  an  episode 
that  happened  before  the  war  which  shows  that  the 
Latin  can  hold  his  own  with  the  German  if  he  tries. 
Roused  by  the  development  of  the  cable  industry  in 
Italian  hands,  the  Germans  started  their  usual 
dumping  and  price-cutting  tactics  in  Italy.  The  director 
of  the  greatest  Italian  cable  concern  at  once  retaliated. 
He  had  already  developed  some  business  in  Germany. 
He  now  fought  the  devil  with  fire  by  inaugurating 
such  a  price-slashing  campaign  in  the  enemy's  country 
that  he  protested,  whereupon  the  Italian  manufacturer 
said: 

"If  you  will  stop  cutting  prices  in  Italy  we  will  do 
likewise  in  Germany.  If  you  do  not  we  will  continue 
to  slash  prices  until  Germany  will  get  our  cables  almost 


234  PEACE  AND  BUSINESS 

for  nothing."  The  Germans  ceased  their  destructive 
methods  in  Italy  at  once. 

Italian  industry  is  learning  the  lesson  of  organiza- 
tion. Range  up  and  down  the  kingdom  and  you  will 
find  a  wool  association,  a  cotton  manufacturers' 
league  and  a  sugar  refiners'  society  in  the  South;  an 
electric-light  producers  and  distributors*  association,  a 
silk  federation  and  a  metallurgical  league  in  the  North. 
These  organizations  have  grown  up  despite  the 
German.  Before  the  war  the  Teuton  was  wise  enough 
to  encourage  them  because  he  was  often  able  to  effect 
control  and  use  them  for  his  own  ends.  When  Italy 
went  to  war,  however,  the  organizations  were  purged 
of  the  Teutonic  taint.  The  aim  will  be  to  keep  the 
bars  up.  In  these  groups  lies  the  real  salvation  of  Italy. 

Throughout  the  kingdom  youth  is  coming  to  the 
fore.  You  must  know  Italy  to  realize  the  extraordinary 
revolution  that  this  implies.  One  drawback  in  the 
government  for  years  was  the  incubus  of  age.  At  forty 
a  man  was  considered  much  too  young  for  public  office. 
No  Italian  could  sit  in  the  Italian  senate  until  he  was  in 
his  forty-first  year.  Most  of  the  statesmen  of  authority 
did  not  "arrive"  until  they  were  old  men.  The  cabinet, 
with  few  exceptions,  has  always  been  composed  of 
graybeards.  This  adulation  for  the  venerable  so  far 
as  leadership  is  concerned  has  gone  into  the  scrap  heap 
of  war,  along  with  many  fetishes.  The  new  Italy  will 
be  ruled  by  young  men  of  the  type  of  Perrone,  Pirelli 
and  Marconi. 

The  inventor  of  wireless  is  one  of  the  examples  of 
the  transformed  Italian.    The  world  in  general  and  the 


THE  NEW  ITALY  235 

German  in  particular  looked  upon  Marconi  as  a 
dreamer  of  scientific  dreams,  more  content  to  toy  with 
the  test  tube  and  experiment  with  a  battery  than  to 
create  industrial  enterprise.  But  it  was  Marconi,  with 
a  group  of  associates,  who  started  the  Banca  Italiana 
di  Sconto  at  Rome,  which  now  competes  with  the 
Banca  Commerciale  Italiana.  It  is  the  underwriter  of 
the  Ansaldo  plant  and  is  reaching  out  in  other  com- 
mercial directions. 

Italian  cities  have  become  infused  with  the  new  spirit 
of  independence.  Take  Milan,  the  hub  of  the  North, 
She  is  the  real  live  wire  among  Italian  municipalities — 
a  dynamic  cross  between  Pittsburgh  and  Chicago. 
After  you  have  inhaled  the  sleepy  air  of  Rome,  heavy 
with  the  dust  of  ruins,  and  then  breathed  the  zippy 
atmosphere  of  Milan  you  feel  as  though  you  had  come 
into  a  new  world  of  thought  and  action,  charged  with 
American  pep. 

In  191 3  if  a  stranger  asked  a  passer-by  in  Milan  if 
he  were  on  the  right  street  the  chances  are  that  the 
Italian  would  have  replied  "J a" — which  is  German  for 
yes.  It  was  instinct  with  him,  because  he  was  so  ac- 
customed to  being  addressed  by  German  salesmen  and 
German  tourists.  To-day  your  courteous  Milanese  is 
more  apt  to  answer  with  the  Italian  "Si" — yes;  or,  as  I 
discovered  more  than  once,  in  perfectly  good  English. 

No  phase  of  Italian  reconstruction  is  of  such 
significance  to  the  United  States  as  the  censorship  of 
immigration  which  has  practically  gone  into  effect 
with  peace.  We  have  used  millions  of  Italian  laborers 
on  our  highways  and  transportation  projects.    In  Italy 


236  PEACE  AND  BUSINESS 


as  elsewhere  wages  have  gone  up.  The  thousands  of 
able-bodied  men  who  went  home  to  fight  will  find  it 
attractive  to  remain  at  home. 

An  eminent  Italian  economic  statesmen  made  the 
following  statement: 

"For  years  after  the  war  Italy  will  need  her  laborers 
as  never  before.  She  will  never  tolerate  such  an 
unrestrained  exodus  of  her  workers  as  took  place 
before  the  war.  We  have  no  desire  to  handicap 
America  in  any  way,  but  we  propose  to  make  labor  in 
Italy  so  interesting  and  profitable  that  the  Italian  will 
have  no  wish  to  go  elsewhere." 

Labor  therefore  is  one  of  Italy's  trump  cards  when 
peace  comes.  Another  advantage  lies  in  her  unem- 
ployed water  power,  which  will  be  harnessed,  so  far  as 
possible,  under  national  auspices.  The  so-called 
Bonomi  Law  calls  for  compulsory  water-power 
development.  With  an  intensive  production  of  "white 
coal"  she  will  not  need  so  many  millions  of  tons  of 
black  from  the  outside.  Italy,  like  England  and  France, 
is  inoculated  with  self-sufficiency. 

Many  obstacles,  however,  lie  in  the  way  of  ultimate 
Italian  freedom  from  German  economic  bondage.  It 
was  comparatively  easy  to  cleanse  the  stables  during 
the  war;  it  will  be  a  much  more  difiicult  matter  to 
keep  them  clean  now  that  the  war  is  over.  Take  the 
agricultural  output  of  Southern  Italy.  Before  the  war 
a  large  part  of  it  went  to  the  Central  Powers  who  were 
ideal  customers  because  they  were  near  neighbors  and 
practically  non-producers  of  lemons,  oranges,  olives, 
grapes,  mushrooms,  dried  fruits  and  kindred  products. 


THE  NEW  ITALY  237 

To  haul  it,  a  compact  and  economic  railway  traffic 
representing  seventy-five  per  cent  of  the  transport  of 
Italy's  agricultural  products  beyond  the  Alps  had  been 
created.  To  wipe  it  off  the  trade  map  means  the 
establishment  of  a  whole  new  system  of  transportation. 
Where  will  it  lead? 

Again,  on  account  of  the  high  sea  freights  that 
prevail  Germany  will  be  a  much  cheaper  source  of  coal 
for  Italy  than  either  Great  Britain  or  the  United 
States.  These  isolated  instances — I  could  present 
many  more  if  I  had  the  space — show  that  in  addition 
to  the  supreme  advantage  of  proximity  Germany  will 
have  many  others  born  of  immediate  necessity  and  the 
old  relationship.  They  will  help  her  to  come  back 
economically  much  more  readily  than  her  enemies  are 
willing  to  admit. 

Already  England  has  put  in  a  strong  bid  for  the 
role.  The  British-Italian  Corporation  in  London  has 
a  branch  in  Italy  called  the  Compagnia  Italo-Britan- 
nica,  fathered  by  the  Credito  Italiano  of  Milan ;  which 
means  that  it  has  the  ear  of  the  most  influential 
industries  in  the  kingdom.  The  London  and  South- 
western Bank  and  the  Banca  Italiana  di  Sconto  have 
organized  the  Anglo-Italian  Syndicate,  Ltd.,  with  a 
capital  stock  of  $250,000,000.  In  addition,  the  London 
City  and  Midland  Bank  is  planning  a  series  of  branches 
in  Italy.  Over  all  this  hovers  the  Anglo-Italian  League, 
whose  object  is  to  foster  trade  relations  between  the 
two  countries. 

France,  too,  has  entered  the  Italian  game  in  a  big 
way,  for  the  old  animosities  are  wiped  out.     Under 


238  PEACE  AND  BUSINESS 

the  auspices  of  the  Banca  Commerciale  ItaHana  the 
Franco-ItaHana  Industrial  Union  has  been  formed  to 
develop  trade  opportunities. 

What  part  will  America  play  in  remaking  the  Italian 
trade  map?  The  ground  for  the  new  commercial 
kinship  is  already  broken.  Italy  wants  close  commercial 
relations  with  us.  The  ill-will  engendered  by  President 
Wilson's  attitude  in  the  Fiume  matter  was  directed 
mainly  at  our  Chief  Executive.  Thus  desire,  one  of 
the  first  requisites  in  scientific  salesmanship,  is 
established. 

But  we  cannot  develop  Italian  trade  in  a  big  and 
permanent  way  without  knowing  the  Italian.  We  have 
made  the  same  mistakes  about  Italian  business  that  we 
made  about  the  Italian  himself.  Many  American  ex- 
porters shy  at  shipping  goods  to  Italy  on  credit.  No 
error  could  be  greater.  Italian  commerce  is  so  straight 
that  it  almost  leans  backward.  The  law  makes  the 
merchant  honest  no  matter  how  he  feels  about  it. 

Italy,  for  example,  has  no  fraudulent  bankrupts.  If 
a  man  avails  himself  of  legal  escape  from  debt,  the 
courts  mercilessly  probe  the  proceeding.  Bankruptcy 
is  akin  to  disgrace.  More  than  one  Italian  has 
committed  suicide  after  going  into  bankruptcy.  An 
Italian  firm's  ledger  automatically  becomes  a  court 
document  subject  to  periodical  scrutiny.  If  a  merchant 
falsifies  his  accounts  he  is  Hable  to  imprisonment  for 
forgery  and  perjury.  Our  court-conducted  evasion  of 
financial  obligations  is  much  easier. 

In  Italy  a  man's  life  is  an  open  book  from  the  day 
of  his  birth. 


THE  NEW  ITALY  239 

With  the  ItaHan  merchant,  as  with  the  French,  the 
uninformed  American  exporter  has  made  the  same 
common  mistake  that  has  prejudiced  so  many  foreign 
concerns  against  us.  Here  is  a  case  in  point:  An 
underwear  house  in  New  York  sold  a  bill  of  goods 
to  a  storekeeper  in  Milan.  He  ordered  from  sample 
and  the  firm's  agent  demanded  that  the  draft  be  at- 
tached to  the  bill  of  lading.  The  buyer  refused  to 
agree  to  these  terms,  on  the  ground  that  the  shipment 
might  not  be  up  to  the  sample. 

"But  you  know  our  name,"  said  the  salesman. 

"Then  I  suggest  that  you  find  out  something  about 
mine  for  a  change!"  said  the  indignant  Italian  as  he 
canceled  the  order. 

The  Italian  is  more  difficult  to  deal  with  than  the 
Frenchman  because  he  is  sensitive,  more  suspicious  and 
a  keener  bargainer.  He  has  learned  efficiency  from 
the  German,  and  therefore  he  is  no  amateur  in  trade. 
He  must  have  long  credits  because  he  in  turn  is 
required  to  carry  his  customers  over  considerable 
periods.  He  reluctantly  gives  credit  information  about 
himself,  but  once  having  given  it  you  can  almost  in- 
variably bank  upon  its  accuracy.  From  long  contact 
with  Teutonic  purveying  to  every  individual  need,  he 
expects  others  to  do  likewise. 

In  doing  business  with  Italy  it  must  be  borne  in 
mind  that,  unlike  South  America,  it  is  an  old  country, 
set  in  its  ways,  and  therefore  difficult  to  develop. 

Many  American  business  men  fail  in  Italy  because 
they  are  too  impatient.  Though  the  North  does  not 
follow  the  Roman  rule  of  "Why  Hurry?"  long  and 


240  PEACE  AND  BUSINESS 

costly  experience  has  discovered  that  the  swift  and 
galvanic  selHng  method  does  not  go.  Like  the 
Frenchman,  the  Itahan  must  be  cuhivated.  His  pride 
must  be  considered. 

The  late  J.  P.  Morgan  once  found  this  out  to  his 
chagrin.  He  heard  that  a  certain  collection  of  enamels, 
objects  of  art  which  he  greatly  admired,  was  owned  by 
an  old  and  comparatively  poor  man.  He  went  to  see 
him,  and  without  any  preliminary  asked  in  his  blunt 
way:  "How  much  do  you  want  for  your  enamels?" 

"I  have  no  desire  to  sell  them,"  said  the  Italian. 

"I  didn't  ask  you  if  you  wanted  to  sell,"  replied 
Mr.  Morgan;  "I  asked  you  how  much  you  wanted  for 
them." 

The  old  man  looked  at  him  for  a  moment  and  then 
replied : 

"All  your  money  could  not  purchase  my  collection. 
Good  day !" 

That  ended  the  episode.  The  moral  of  the  tale  is 
that  if  you  want  to  do  business  with  the  Italian 
cooperate  with  him.  Clash  means  failure.  In  time 
you  find  that  he  is  readily  adaptable,  but  you  must 
adapt  him  in  his  own  way. 

What  does  Italy  need  that  the  United  States  can 
supply?  First  and  foremost  is  capital.  If  the  kingdom 
is  to  free  herself  from  German  economic  control  after 
the  war  she  must  have  money  with  which  to  develop 
her  water  power,  electrify  her  railroads  and  expand 
her  shipping.  American  money  will  be  all  the  more 
welcome,  because,  unlike  the  German,  it  is  not  political 
and  makes  no  drastic  exactions.     We  can  emulate 


THE  NEW  ITALY  241 

England  with  our  loans  and  stipulate  that  the  proceeds 
be  spent  on  American  goods  or  machinery. 

Italy  offers  an  immense  field  for  a  varied  industrial 
development.  The  South,  for  example,  drips  with 
lemons;  yet  there  is  not  a  single  citric-acid  factory. 
Sardinia  is  one  huge,  practically  untouched  mine  of 
mineral  deposits. 

Italy  will  require  immense  quantities  of  raw  materi- 
als for  her  largely  increased  manufacturing  interests. 
She  will  also  be  in  the  market  for  American  shoes, 
typewriters,  manufactured  food  products,  low-priced 
automobiles  and  motorcycles,  farm  implements, 
machine  tools,  ready-made  clothing,  toilet  articles, 
furniture,  office  equipment,  boots,  woodenware  and 
lumber,  I  cite  lumber  because,  owing  to  the  coal  famine 
during  the  war,  the  country  is  being  denuded  of  its 
forests. 

America  can  enter  this  domain  by  four  methods: 
Through  branch  houses — affiliated  branches  working 
independently  of  the  main  house;  through  a  general 
agent  for  the  whole  country ;  through  a  chain  of  local 
agents ;  or  by  direct  sales  to  wholesalers  or  retailers  in 
the  kingdom. 

Already  one  useful  trade  outpost  has  been  estab- 
lished in  Italy  in  the  shape  of  an  American  bank.  It  is 
located  at  Genoa,  has  a  pretentious  office  in  Milan,  and 
is  a  branch  of  one  of  the  greatest  of  all  Wall  Street's 
financial  institutions,  which  has  already  established 
itself  in  Russia,  England  and  South  America.  It  does 
a  general  banking  business  and  furnishes  credit  and 
trade  information. 


242  PEACE  AND  BUSINESS 

A  second  aid  is  the  American  Chamber  of  Com- 
merce for  Italy  at  Milan — a  definite,  going  and  helpful 
concern  with  515  members,  including  420  Italian  firms, 
35  American  firms  established  in  Italy,  and  60  in  the 
United  States. 

If  America  is  to  establish  an  adequate  commercial 
relationship  with  Italy  she  must  reckon  with  a  strong 
German  opposition.  The  flare-up  about  Fiume  was 
cunningly  capitalized  by  Germany  to  her  advantage. 
The  moment  that  President  Wilson  took  his  strong 
stand  against  the  Italian  absorption  of  the  Adriatic 
port  the  Teutonic  press  agent  immediately  said :  "Ger- 
many is  your  only  friend."  Millions  of  Italians 
accepted  this  as  gospel  truth  before  the  war;  they  are 
disposed  to  believe  it  now  despite  the  downfall  of 
that  one-time  proud  and  imperial  Germanic  structure. 


VII — Can  Germany  Come  Bach? 


CAN  Germany  come  back?  This  is  the  question 
that  leaped  to  the  hps  of  the  world  on  that 
historic  anniversary  of  the  sinking  of  the  Lusi- 
tania  when  the  peace  terms  were  handed  to  the  Teu- 
tonic delegates  at  Versailles.  Never  in  the  history  of 
war  has  a  nation  paid  such  a  penalty  for  lust  and  bru- 
tality as  is  justly  exacted  in  that  declaration  of  uni- 
versal economic  stability. 

Although  the  Peace  Treaty  literally  strips  Germany 
to  her  foolish  hide,  subtracts  six  millions  of  people 
from  her  population,  puts  what  amounts  to  a  perma- 
nent mortgage  on  her  future  earnings,  slices  off  an 
area  that  would  make  a  creditable  principality,  and 
reduces  her  to  a  fourth-rate  military  power  she  still 
has  tremendous  recuperative  powers.  All  future  trade 
safety  depends  upon  how  long  Germany  remains 
curbed. 

Any  estimate  of  the  Teutonic  ability  to  recover  must 
be  prefaced  by  a  swift  survey  of  the  Germany  that 
was.  Forty-eight  years  ago  an  empire  of  blood  and 
iron  emerged  triumphant  out  of  the  crushing  defeat 
of  France.    It  was  consecrated  to  one  kindling  ambi- 

243 


244  PEACE  AND  BUSINESS 

tion,  which  was  to  have  and  to  hold  a  place  in  the 
world's  trade  sun.    That  desire  was  realized, 

I  can  best  illustrate  the  keynote  of  this  extraordi- 
nary expansion  by  repeating  a  story  told  me  in  Paris 
last  summer  by  a  distinguished  American  who  was 
received  in  audience  by  the  ex-Kaiser  back  in  19 12, 
when  he  was  then  at  the  crest  of  his  power  and  popu- 
larity. The  conversation  between  this  American  and 
Herr  Hohenzollern  turned  on  the  English  hostility 
toward  Germany — then  a  timely  topic  of  conversation 
in  that  country.  The  duel  of  naval  armaments  had 
been  on  for  some  time,  to  the  particular  grief  of  the 
Gennan  pocketbook. 

"Do  you  know  what  is  the  matter  with  England?" 
asked  the  fomier  ruler  of  Potsdam. 

"No,"  was  the  New  Yorker's  tactful  reply. 

"It's  *Mig,'  "  rejoined  the  Emperor  with  a  knowing 
smile. 

The  American  looked  somewhat  surprised  and 
answered:  *T  must  confess  that  I  do  not  follow  you." 

The  now  dethroned  All-Highest  smirked  and  then 
proceeded  to  explain  as  follows : 

"  'Mig'  stands  for  'Made  in  Germany.'  Every 
Englishman  sees  it  in  the  morning  when  he  shaves  him- 
self with  a  German  razor.  He  cannot  travel  to  his 
office  or  do  his  day's  work  without  using  something 
that  Germany  manufactures.  England  is  suffering 
from  too  much  German  enterprise." 

What  the  discredited  master  of  militarism  said  that 
day  was  quite  true.  Yet  the  stamp  Made  in  Germany, 
which  was  the  hall  mark  of  a  proud  prestige,  was  like- 


CAN  GERMANY  COME  BACK?         245 

wise  the  root  of  the  German  undoing.  It  led  her 
production  to  over-reach  itself,  and  therein  lay  the  real 
reason  for  its  fall.  It  took  the  Germans  four  years  to 
realize  the  bitter  truth  that  they  could  have  accom- 
plished the  peaceful  trade  conquest  of  the  universe  if 
they  had  only  kept  the  dogs  of  war  leashed.  Germany's 
mistake  was  that  she  could  not  leave  well-enough  alone. 
Her  peaceful  penetration,  as  everyone  knows,  had  fast- 
ened its  hooks  into  every  trade  body;  the  sun  never 
set  upon  her  banks,  her  ships  and  her  salesmen. 

Germany  progressed  not  only  in  terms  of  geography 
but  in  terms  of  goods.  England  acquired  colonies  and 
left  their  development  to  individual  enterprise  and 
initiative.  Germany,  on  the  other  hand,  colonized  and 
did  the  developing  herself.  From  the  dawn  of  her 
empire  the  government  was  full  partner  in  every  Ger- 
man overseas  enterprise,  the  glorified  inspiration  and 
accelerator  of  business.  No  community  and  no  trader 
were  too  small  to  be  cultivated.  It  was  the  aggregate 
of  small  accounts,  garnered  throughout  the  world,  that 
made  the  sum  total  of  the  German  widespread  trade 
strength.  In  this  the  German  was  wise,  because,  as 
any  comparison  between  German  and  British  trade  ac- 
counts will  show,  the  percentage  loss  among  the  former 
was  so  small,  with  the  possible  exception  of  Japan, 
where  she  plunged  heavily  before  the  collapse  of  the 
boom  in  1906,  as  to  be  almost  trivial  when  you  consider 
the  gross  volume.  This  systematic  and  efficient 
colonization  would  have  literally  sewed  up  the  markets 
of  the  universe,  and  no  one,  not  even  England,  would 
have  had  any  considerable  look  in. 


246  PEACE  AND  BUSINESS 

Germany  was  the  economic  master  of  Italy;  she 
dominated  Russia;  the  Berlin  to  Bagdad  Railway  was 
the  key  to  the  treasures  of  the  East;  Belgium, 
Sweden,  Spain  and  Holland  were  commercially  plastic 
in  her  hands ;  England's  complacency  had  made  her  an 
easy  victim,  and  France,  despite  the  resentment  over 
the  loss  of  Alsace-Lorraine,  was  flooded  with  Teutonic 
goods.  In  South  America  and  South  Africa  she  was 
making  hay  while  the  business  sun  shone,  and  in  the 
United  States  Kultur  could  do  no  wrong.  Thus  Ger- 
many had  everything  coming  her  way.  Trade  nature, 
like  human  nature.  Is  prone  to  follow  the  line  of  least 
resistance.  Germany  would  undoubtedly  have  found 
herself  commercial  mistress  of  the  globe  In  the  natural 
course  of  events.  But  she  went  too  far  and  paid  the 
price  of  her  folly. 

The  bulwark  of  German  world  trade  might  was  a 
Junkerism  no  less  potent  in  creating  commerce  than  In 
framing  up  war.  The  nerve  center  of  the  Teutonic 
business  adventuring  was  not  the  Kaiser,  as  many  have 
been  led  to  believe,  but  the  Pan  Germans,  whose  real 
headquarters  were  In  the  German  Foreign  Office  In  the 
Wilhelmstrasse.  The  Kaiser  believed  what  the  Prussian 
business  barons  told  him — Ballin  admitted  this  shortly 
before  his  death — and  he  really  acted  as  exalted  mouth- 
piece and  press  agent.  It  is  no  great  secret  that  W. 
Hohenzollern  was  himself  subsidized  by  German 
commerce  in  precisely  the  same  way  that  the  govern- 
ment endowed  business.  He  was  a  large  stockholder 
in  Krupps;  In  the  Potash  Trust;  in  the  A.  E.  G. — the 
German  electric-machinery  octopus;  and  in  both  the 


CAN  GERMANY  COME  BACK?         247 

great  navigation  lines — the  Hamburg-American  and 
the  North  German  Lloyd;  he  played  no  favorites  when 
it  came  to  the  box  office.  Under  his  royal  hot  air 
German  business  hypnotized  itself  into  the  belief  that 
it  was  invincible,  that  it  was  only  necessary  to  clinch 
an  international  triumph  by  the  waging  of  a  successful 
world  war.  Besides — and  it  is  an  interesting  side  light 
on  the  causes  of  the  stupendous  struggle — the  army 
looked  with  envy  upon  its  full  partner,  business.  Trade 
was  getting  all  the  action  and  the  acclaim.  The 
helmeted  and  spurred  gentry  needed  some  real  exercise. 

Germany  got  what  she  was  looking  for,  but  without 
the  result  she  anticipated.  The  myth  of  German  might 
was  shattered ;  the  much-vaunted  partnership  between 
the  Kaiser  and  God  proved  to  be  a  fervid  piece  of 
imagination.  Despite  this  disillusion,  and  though  the 
German  fleet  is  dissolved,  the  U-boats  safely  tied  up 
in  British  harbors,  and  the  German  Army  scattered  to 
its  disillusionized  homes,  there  still  remains  the  genius 
of  thrift,  concentration  and  organization  which  made 
Germany  industrially  great.  It  is  with  this  genius  that 
the  world  must  now  reckon. 

Can  German  business  recover  in  the  face  of  defeat 
and  without  the  subsidies,  colonies  and  other  incentives 
that  bulwarked  it  before  the  war?  Can  it  stand  up 
against  the  ill  will  of  a  whole  world  now  wise  to  the 
hypocrisy  and  cruelty  that  lurked  behind  its  astonishing 
development  ? 

No  matter  from  what  angle  you  examine  the 
prospects  of  German  economic  rehabilitation,  one  thing 
is  certain:  The  eagerness  with  which  the  late  Imperial 


248  PEACE  AND  BUSINESS 

Government  literally  begged  for  an  armistice  indicated 
that  conditions  were  worse  than  we  thought.  For  three 
years — as  a  direct  result  of  much  observation  in 
Europe,  particularly  in  the  neutral  countries  that 
bordered  on  Germany,  with  whom  she  was  in  daily 
social  and  commercial  communication — I  believed  that 
no  matter  when  the  war  ended  she  would  turn  swiftly 
to  recovery.  The  unexpectedness  of  her  collapse 
changed  my  point  of  view  considerably,  but  only  to  the 
extent  that  the  restoration  would  take  longer  than  the 
original  estimate. 

I  am  still  convinced  that  there  is  a  good  deal  of 
camouflage  in  Germany's  protests  about  economic 
disintegration  and  the  inability  to  make  adequate 
restitution  for  the  horrors  and  humiliations  that  she 
imposed  upon  the  world. 

Keep  in  mind  the  fact  that  the  German  workman 
and  not  the  German  war  god  dictated  the  surrender. 
Economic  peace  was  the  first  consideration.  The 
imperialized  industry  which  made  the  disguised  Ger- 
many of  other  days  a  super  force  will  dictate  regenera- 
tion. No  matter  whether  she  becomes  one  republic  or 
a  group  of  thinly  veneered  and  equally  unrepentant 
democracies  her  struggle  for  existence  and  recupera- 
tion alone  will  swing  Germany  back  to  some  degree  of 
prosperity.  Furthermore,  if  definite  and  permanent 
curbs  in  the  shape  of  rationed  materials,  restricted  use 
of  the  world's  highway  of  traffic  and,  most  of  all, 
the  full  glare  of  publicity  on  all  her  overseas  activities 
are  not  placed  upon  her  new  expansion  she  will  make 
a  surprising  come-back. 


CAN  GERMANY  COME  BACK?         249 


II 


Let  us  now  see  just  what  the  possibilities  of  German 
recovery  are.  This  examination  naturally  reveals  two 
phases :  One  includes  the  constructive  lessons  learned 
during  the  war  and  the  various  assets  with  which  the 
nation  faces  the  future ;  the  other  is  the  roll  of  handi- 
caps under  which  Germany,  stripped  to  her  unashamed 
self,  will  labor  in  the  eyes  and  the  markets  of  the 
world. 

Any  estimate  of  the  assets  with  which  Germany 
initiates  reconstruction  must  begin  with  industry.  The 
foundation  of  her  one-time  world  trade  was  a  vast 
export  in  manufactured  articles.  In  1914  her  foreign 
business  amounted  to  $5,000,000,000.  During  the  war 
this  dwindled  to  almost  nothing.  From  19 14  until 
19 1 7  the  empire  was  able  to  carry  on  a  nominal  trade 
with  Scandinavia,  Austria  and  Turkey.  During  the 
last  year  of  the  war,  however,  self-preservation  dic- 
tated an  almost  complete  concentration  on  national 
defense.  All  this  means  that  so  far  as  world  trade  is 
concerned  Germany  will  have  to  begin  all  over  again. 
In  some  respects  she  reverts  practically  to  her  status  of 
1871,  when  the  whole  era  of  her  modern  expansion 
began. 

Between  1871  and  19 14,  the  whole  close-knit,  highly 
organized  and  government-endowed  industry  was 
reared.  This  industry,  instead  of  being  paralyzed  by 
the  strain  of  the  war  and  the  shock  of  defeat,  is  in 


250  PEACE  AND  BUSINESS 

-....»  -I        ...  — —  ...  II  ■  —.1-      ...■     -        -      ■       ■■  -,  ■        ....  ...  ^ 

reality  more  intensive,  and  therefore  more  efficient, 
than  ever  before.  Moreover,  this  vast  productive 
macliine  stands  intact.  Except  in  that  comparatively 
small  area  bordering  on  the  Rhine  which  was  bombed 
during  the  last  three  months  of  the  war  not  a  single 
German  factory  has  been  damaged.  The  war  taught 
Germany  the  meaning  of  a  super  quantity  output  as 
never  before.  While  British  guns  were  being  rationed 
in  the  first  twelve  months  of  the  war  the  German  ar- 
tillery literally  rained  projectiles  simply  because  the 
shell  factories  and  the  industries  of  peace  knew  the 
formula  of  vast  output  long  before  the  world  saw  red. 
Hence,  given  even  a  moderate  supply  of  raw  materials 
plus  the  genius  of  substitution,  which  was  second  na- 
ture in  Germany  long  before  the  invasion  of  Belgium, 
German  production  will  catch  its  stride. 

The  keynote  of  the  whole  German  commercial 
expansion  before  the  war  lay  in  industrial  foresight.  I 
might  paraphrase  a  famous  maxim  by  Pascal  and  make 
it  read :  *To  foresee  is  to  sell."  While  the  rest  of  the 
world,  to  employ  the  happy  phrase  coined  by  Henri 
Hauser,  the  French  economist,  suffered  from 
"economic  myopia"  Germany  looked  ahead.  Every 
port,  canal,  railway,  warehouse  and  factory  that  she 
constructed  was  capable  of  expansion.  The  British  and 
French  said  it  was  a  waste  of  money  and  energy,  but 
somehow  or  other  the  German  business  always  kept 
pace  with  this  progressive  development.  Here  you  get 
the  secret  of  the  empire's  ability  to  hold  out  during 
those  four  years  of  struggle.  The  productive  organi- 
zation met  every  strain  of  war.    Being  ready  it  did  not 


CAN  GERMANY  COME  BACK?         251 


suffer  the  dislocation  that  upset  British  and  French 
industry  for  a  time.  Physically  it  is  equipped  to  do 
the  same  job  in  peace. 

But  the  most  powerful  productive  machine  in  the 
world  is  impotent  unless  it  has  the  wherewithal  to  work 
and  can  turn  over  its  output.  First  and  foremost  is 
the  question  of  raw  materials.  I  will  go  into  two 
important  aspects  that  bear  directly  upon  Teutonic 
reconstruction.  One  deals  with  the  great  lesson  of 
substitution  that  Germany  learned  during  the  war.  The 
*'iron  ring"  of  the  British  blockade  at  once  shut  off 
the  import  of  scores  of  essentials  to  manufacture, 
especially  cotton,  copper  and  rubber.  To  a  degree  not 
approached  by  any  other  nation  Germany  was  able  to 
create  and  devise  substitutes  for  many  of  the  needfuls. 
Life  became  one  substitute  after  another.  Ersats — 
the  German  word  for  substitute — became  the  god  that 
industry  had  to  worship.  There  were  substitutes  for 
everything  but  human  life  and  sunshine! 

Let  me  illustrate  with  the  case  of  cotton  substitutes. 
The  production  of  yarn  made  from  paper  from  June 
I,  19 17,  to  June  I,  19 1 8,  aggregated  40,000,000 
kilograms.  At  first  the  public  declined  to  accept  this 
substitute  in  place  of  the  pure  cotton  thread.  Necessity 
knows  no  choice.  As  soon  as  they  began  to  use  it  they 
found  that  it  was  both  cheap  and  practical.  It  could 
not  be  used  for  underwear  and  the  better  qualities  of 
cloth,  but  it  was  successfully  employed  for  workmen's 
clothing,  table  and  bed  linen,  sail  cloth,  and  even  for 
the  manufacture  of  substitutes  for  leather.  This  paper 
yarn  was  combined  with  wool  and  artificial  wool  in  th^ 


252  PEACE  AND  BUSINESS 

manufacture  of  outer  garments — even  overcoats.  This 
industry  reached  such  a  point  of  development  that  the 
soldiers  in  the  field,  in  the  last  months  of  the  struggle, 
were  equipped  with  these  phony  clothes. 

I  cite  this  really  extraordinary  example  of  substitu- 
tion to  show  that  the  Germans,  having  learned  to  do 
without  many  things  during  the  war,  will  be  able  to 
continue  this  abstinence  during  the  years  of  recon- 
struction. It  means  that  the  country  will  have  to 
import  less  and  will  be  able,  therefore,  to  sell  more. 

Right  at  this  point  it  may  be  well  to  impress  the 
fact  that  so  far  as  any  future  trade  with  Germany  is 
concerned  it  must  be  remembered  that  you  cannot  sell 
a  nation  without  buying  from  it.  This  is  one  of  the 
ironclad  and  uncompromising  rules  of  international 
business.  Coupled  with  this  maxim  is  the  second  im- 
portant consideration  that,  though  the  hand  of  the 
civilized  and  self-respecting  world  will  be  raised  against 
her,  Germany,  despite  the  loss  of  the  Lorraine  iron 
fields,  will  continue  to  have  certain  valuable  bargaining 
assets.  For  one  thing,  she  has  and  will  continue  to 
have  immense  quantities  of  coal. 

She  still  has  vast  coal  deposits.  During  the  war  coal 
meant  life,  and  the  nations  that  had  it  wielded  a  power 
that  was  both  economic  and  political.  Germany,  used 
her  immense  coal  supply  to  browbeat  the  neutrals. 
Those  neutrals  will  continue  to  need  coal,  and  in  ex- 
change for  coal  concessions  from  Germany  they  will 
find  the  means  to  provide  her  with  raw  materials. 

What  most  people  do  not  realize  is  that  during  the 
past  four  years  Germany  has  piled  up  immense  quanti- 


CAN  GERMANY  COME  BACK?         253 


ties  of  raw  materials  in  the  neutral  countries.  In  some 
of  the  preceding  chapters  I  have  pointed  out  how- 
Germany  piled  up  immense  stores  of  cotton,  rubber 
and  metals  in  Switzerland  and  Spain.  This  immense 
mass  of  material  is  now  available  for  conversion  into 
merchandise  which  is  already  in  competition  with 
British  and  American  goods  in  the  neutral  markets.  If 
we  do  not  protect  ourselves  adequately  it  will  soon  be 
flooding  our  own. 

One  of  Germany's  chief  bulwarks  of  recovery,  how- 
ever, is  Russia.  Although  the  obscene  treaty  signed  at 
Brest-Litovsk  was  abrogated  at  Versailles,  the  Teu- 
tonic grip  on  the  Slavic  underground  treasure-house  of 
minerals  has  not  relaxed.  Remember  that  there  are 
two  million  Russians  of  German  birth  in  Russia  who 
not  only  continue  to  speak  German  but  who  are  loyal 
to  the  country  in  which  they  were  born.  In  addition 
there  are  six  million  Germans  and  Poles  who  speak 
German  as  the  language  of  commerce  and  society. 
Although  some  of  these  have  been  withdrawn  from 
German  sovereignty  their  obligation  to  the  Fatherland 
will  not  cease. 

Moreover,  Germany's  industrial  machine  remains 
not  only  unimpaired  but  geared  up  to  an  efficiency  and 
an  output  amply  demonstrated  during  the  war  when 
they  practically  provided  the  entire  munitions  output 
of  the  nation.  Her  factories  underwent  no  ravage  nor 
did  they  suffer  the  ordeal  of  the  hundreds  of  mills  in 
France  and  Belgium  that  were  stripped  of  their 
machinery. 

Germany  has  the  physical  machine,  and  by  hook  or 


254  PEACE  AND  BUSINESS 

crook  she  will  manage  to  get  a  working  amount  of  raw 
materials.    What  are  her  other  industrial  assets  ? 

Heading  the  list  must  come  her  trained  population, 
which  in  the  last  analysis  is  the  backbone  of  any  nation. 
Just  as  she  conserved  her  artists,  poets,  musicians  and 
scientists,  so  has  she  kept  her  industrial  experts  far 
from  the  firing  line.  If  you  know  anything  about  Ger- 
man industry  you  also  know  that  it  resulted  from  a 
combination  of  professors  and  business  men.  Every 
factory  had  its  staff  of  expert  investigators  who  were 
content  to  work  for  a  small  wage  in  order  to  be  called 
by  what  Germany  considered  the  magic  title  of  "Dok- 
tor."  It  meant  a  poor  meal  ticket  but  usually  a  little 
red  ribbon  in  the  buttonhole.  That  congress  of  im- 
perial well-wishers  is  still  going  strong.  It  made  the 
whole  triumph  of  German  substitution  possible  during 
the  war,  and  it  will  devise  ways  and  means  to  counter- 
act whatever  economic  emergencies  may  arise  now. 

Though  millions  of  German  men  have  been  killed  the 
country  still  has  her  extraordinary  reserve  of  trained 
and  disciplined  boys.  One  of  the  mainstays  of  the 
whole  German  industrial  advance  was  the  system  of 
vocational  education  in  the  schools.  Just  as  soon  as  a 
German  boy  reached  the  age  of  ten  or  twelve  his  life's 
occupation  was  determined  and  every  hour  of  his  work 
and  play  henceforth  was  shaped  to  that  end.  This  is 
one  reason  why  the  poison  of  militarism,  injected  so 
early,  became  the  national  malady.  Obedience  was  the 
watchword.  "Unless  you  obey  you  will  never  com- 
mand" always  rose  before  the  eye. 

National  policy  dictated  that  heredity  or  talent  be 


CAN  GERMANY  COME  BACK?         255 

capitalized  to  the  fullest  extent.  The  strong  youth  was 
booked  to  be  a  brewer,  an  iron  worker,  a  carpenter  or 
a  mason ;  the  frail  youngster  was  trained  to  be  a  tailor, 
a  bookbinder,  a  jeweler  or  a  wood  turner.  In  the  same 
way  the  lad  with  weak  lungs  was  kept  out  of  the  trades 
where  he  might  inhale  dust.  The  system  was  so  per- 
fect that  a  boy  with  inflamed  eyelids  was  kept  out  of 
color  work,  just  as  his  mate  with  perspiring  hands  was 
deemed  unfit  for  fine  metal  work  or  lithography. 

To  be  unskilled  in  Germany  was  and  is  regarded  as 
treason.  The  German  youth  had  to  be  developed  for 
military  service — "cannon  fodder" — or  to  be  a  cog  in 
the  productive  machine  whose  human  output  was  no 
less  imposing  than  its  material.  Germany  could  well 
afford  to  plunge  the  world  into  war,  for  the  excellent 
reason  that  every  year,  thanks  to  a  birth  rate  that  was 
almost  standardized  like  the  industrial  system,  800,000 
pairs  of  tiny  hands  were  added  to  the  social  fabric. 

Before  the  war  German  industry  had  the  vast  stim- 
ulus created  by  the  desire  to  rule  the  world.  The  lash 
that  kept  these  slaves  of  power  at  the  treadmill  was  the 
Pan-German  autocracy,  whose  mouthpiece  was  the 
Kaiser.  Concentrated  authority  will  not  crumble  now 
that  the  war  is  over,  no  matter  what  camouflage  of  de- 
mocracy will  mask  the  real  Germany.  Many  years  ago 
Bismarck,  who  was  the  wisest  of  all  the  Teutons  and 
who  said  that  the  Prussians  were  "a  nation  of  house- 
hold servants,"  made  an  illuminating  remark  which 
indicates  that  Germany,  no  matter  what  national  ban- 
ner she  flies,  will  always  remain  subservient  to  organ- 
ized and  iron-handed  rule.     He  said :     "The  German^ 


256  PEACE  AND  BUSINESS 

has  no  loyalty  to  Germany  as  Germany.  He  must  have 
some  kind  of  autocracy  to  serve,  some  master  to  obey." 
The  ex-Kaiser  embodied  it.  Now  that  he  is  in  the  dis- 
card there  will  be  a  successor  in  the  shape  of  a  quasi- 
industrial  monarchy  which  will  crack  the  whip  and  the 
German  worker  will  dance  to  the  tune  of  the  whirring 
wheels  in  every  factory  in  the  country. 

Aside  from  any  desire  for  restoration  the  German 
home  demand  will  stimulate  industry.  German  shelves 
are  bare.  The  copper  domes,  the  iron  doorknobs,  even 
the  tablecloths  were  commandeered  for  war  material. 
Handkerchiefs  and  bed  sheets  were  rationed,  so  scant 
was  the  supply.  All  this  must  be  replenished.  I  was 
told  in  Switzerland  that  the  German  after-the-war 
needs  will  mean  an  expenditure  in  one  way  or  another 
of  $7,000,000,000. 

To  renew  the  supply  of  one  article  of  women's  un- 
derwear Germany  will  require  the  total  output  of  all 
the  Swiss  factories  for  four  years. 

Behind  all  this  is  the  spur  of  drastic  nation-wide 
necessity.  Indemnities  must  be  paid,  broken  fortunes 
recuperated,  battered  pride  and  prestige  restored.  No 
people  emerging  from  war  ever  had  so  great  a  stimulus 
for  unremitting  toil  as  the  Germans.  Being  an  orderly 
and  disciplined  people  they  will  go  back  to  their  jobs; 
to  the  rut  where  the  system  placed  them. 

That  order  is  expressed  in  efhciency.  For  years 
there  was  a  huge  spilling  of  words  about  German  effi- 
ciency. The  plain  truth  about  it  is  that  so  long  as  it  is 
let  alone  it  remains  a  marvel  of  action  and  output.  In 
reality  it  is  a  smug,  unthinking  thing.    Throw  a  wrench 


CAN  GERMANY  COME  BACK?         257 

into  the  machinery  and  the  whole  structure  goes  wrong. 
A  sudden  problem  would  have  the  same  effect.  The 
German  offensives  during  the  war  afforded  striking 
illustrations.  So  long  as  the  Great  General  Staff  was 
able  to  launch  and  develop  a  carefully  planned  advance 
without  distractions  from  unexpected  quarters  the  even 
tenor  of  the  German  war  way  went  on  "as  arranged." 
The  moment  that  Foch  issued  that  historic  order  "No 
quiet  Fronts/'  the  whole  German  system  began  to  break 
down.  The  strategists  got  a  bad  case  of  nerves,  and 
collapse  followed. 


258  PEACE  AND  BUSINESS 


III 


One  factor  that  favors  German  world  rehabilitation 
lies  in  her  remarkable  ability  to  give  trade  what  it 
wants.  This  is  likely  to  help  to  overcome  the  inevit- 
able prejudice  against  German  goods.  That  the  Ger- 
man is  perfectly  willing  to  give  the  customer  precisely 
what  he  wants,  no  matter  how  it  wounds  his  pride,  has 
been  proved  innumerable  times.  An  actual  happening 
will  indicate  what  I  mean.  Not  so  many  years  after 
the  Franco-Prussian  War,  when  the  heart  of  France 
burned  with  bitter  hatred  of  the  Prussian,  a  merchant 
in  Dijon  gave  a  German  commercial  traveler  an  order 
for  some  mustard  pots.  He  specified  that  they  should 
be  made  in  the  form  of  pig  heads  wearing  Prussian 
helmets  showing  the  Imperial  eagle.  As  a  matter  of 
fact  he  gave  the  salesman  the  order  just  to  get  rid  of 
him.  To  his  great  surprise  the  consignment  of  articles 
arrived  in  due  time  made  according  to  schedule.  The 
German  consul  in  Dijon  saw  one  of  these  pots  on  the 
table  in  his  favorite  restaurant  and  made  a  formal  com- 
plaint through  the  German  embassy  at  Paris.  Great 
was  his  humiliation  when  the  report  came  back  that 
the  offensive  pieces  were  made  in  Germany. 

The  German  industrial  machine  is  bigger  to-day  than 
ever  before.  It  is  due  not  only  to  expansion  for  war 
materials  but  because  such  colossal  armament  establish- 
ments as  Krupp's,  for  example,  are  being  turned  to  the 
arts  of  peace.    Old  Alfred  Krupp  would  probably  turn 


CAN  GERMANY  COME  BACK?         259 


over  in  his  grave  if  he  knew  that  the  giant  of  destruc- 
tion that  he  raised  from  infancy  at  Essen  is  making 
typewriters  instead  of  guns;  that  Bertha  Krupp,  the 
one-time  "Queen  of  Essen"  and  "Our  Lady  of  the 
Cannon,"  is  wondering  how  the  profit  on  a  sausage 
machine  compares  with  the  return  on  a  case  of  six-inch 
shells. 

Throughout  the  war  the  organization  of  German 
stock  companies  and  corporations  went  on  apace.  In 
Bavaria  alone,  during  19 17,  fourteen  companies  de- 
voted entirely  to  peace  projects  were  incorporated,  with 
a  total  capitalization  of  nearly  40,000,000  marks. 

One  aid  to  the  new  German  industry  is  worth  ex- 
plaining. The  moment  we  entered  the  war  the  German 
Government  seized  and  appropriated  the  patents  of 
every  American  article  sold  in  the  empire.  What  was 
the  result?  When  I  was  in  Switzerland  I  saw  what 
seemed  to  be  the  perfect  model  of  a  certain  well-known 
American  typewriter.  On  examination  I  found  that 
it  was  not  only  German-made  but  had  been  manufac- 
tured under  a  special  license  granted  by  the  German 
Government.  This  license  was  not  given  to  any  one 
producer,  but  was  and  is  accessible  to  every  shop  or 
factory  in  the  country  on  the  payment  of  five  dollars 
for  every  machine  made.  The  danger  from  this  per- 
formance lies  in  the  fact  that  now  that  the  war  is  over 
Germany  will  try  to  flood  the  world — if  she  is  per- 
mitted to  do  so — with  these  typewriters,  which  will  be 
sold  as  the  genuine  American  article.  She  is  repeating 
the  same  procedure  with  cash  registers,  adding  ma- 
chines, automobile  self-starters  and  other  distinctively 


26o  PEACE  AND  BUSINESS 


American  articles  that  we  formerly  sold  in  large  quan- 
tities everywhere. 

Incidentally  I  might  add  that  Germany  has  taken  the 
same  liberty  with  trade-marks  that  she  took  with  treat- 
ies. For  her  they  merely  represent  so  many  scraps  of 
paper.  In  Holland,  Brazil,  Argentina  and  Chile  she  be- 
gan to  exploit  so-called  American  tires  after  the  war 
began — using  the  American  names — and  you  may  be 
sure  that  the  habit  will  not  stop  at  a  time  when  she  will 
resort  to  every  known  expedient  to  pay  her  debts  and 
roll  up  a  great  volume  of  foreign  business. 

That  Germany  in  the  face  of  defeat  began  a  whole 
new  program  for  international  trade  may  be  proved  by 
many  things.  I  have  before  me  as  I  write  a  circular 
issued  by  the  Plauen  Chamber  of  Commerce.  It  bears 
the  date  of  August  i,  19 18.  Plauen  is  the  center  of  the 
German  embroidery  and  embroidery-machine  industry. 
It  is  St.  Gall's  only  rival.  The  Plauen  products  were 
sold  throughout  the  world. 

The  Chamber  of  Commerce  circular  so  completely 
outlines  one  angle  of  the  new  German  world-trade  pro- 
gram that  I  reproduce  it  in  full  as  follows : 

"j.  The  Chamber  of  Commerce  is  of  opinion  that 
the  best  weapons  for  the  resuscitation  of  German  for- 
eign commerce  will  be  found  in  German  commodities. 
These  will  soon  reconquer  the  old  markets  which  be- 
fore the  war  were  dominated  by  German  trade. 

"2.  German  Chambers  of  Commerce  should  be  set 
up  in  foreign  countries  as  independent  bodies,  which 
should  be  free  from  government  leading  strings. 
Everything  possible  must  be  done  to  avoid  the  impres- 


CAN  GERMANY  COME  BACK?         261 

sion  that  these  institutions  are  government  organs; 
otherwise  an  insuperable  obstacle  will  from  the  very 
first  be  placed  in  their  path,  since  it  may  be  assumed 
that  the  suspicions  of  enemy  countries  will  continue 
after  the  war.  The  German  Chambers  of  Commerce 
should  be  modeled  on  the  English  type. 

"3.  A  great  commercial  periodical  should  be  issued 
in  the  interests  of  German  industry. 

"4.  German  banks  would  be  a  considerable  aid  to 
German  competition  in  foreign  markets.  These  insti- 
tutions should  not  be  set  up  merely  in  a  few  foreign 
centers,  but  should  rather  form  a  net  work  of  banks  all 
over  each  foreign  country,  with  a  central  bank,  and 
branches  in  all  important  towns. 

"5.  The  cinematograph  should  be  utilized  as  a  prop- 
aganda agency  by  German  industry.  Every  important 
department  of  manufacture  should  prepare  films  show- 
ing its  various  processes,  and  laying  stress  on  the 
economic  importance  of  the  industry  in  question  for 
Germany  and  foreign  countries. 

"6.  Preparations  for  an  Export  Directory  should  be 
taken  in  hand  at  once." 

Plauen  merely  expresses  the  whole  German  trade 
feeling.  The  Foreign  Trading  Company,  Ltd.,  which 
was  set  up  in  the  Bureau  of  Economics  in  Berlin,  is 
typical  of  the  kind  of  organization  that  will  direct  and 
exploit  the  German  overseas  reconstruction.  The  ob- 
ject of  the  corporation  as  outlined  in  its  circular  is : 

"To  provide  German  industry  and  German  trade 
with  the  possibility  of  participation  in  the  revival  of 
export  business,  especially  to  the  countries  hitherto  our 


262  PEACE  AND  BUSINESS 


enemies.  The  company  has  a  semi-official  character, 
and  has  been  founded  by  great  economic  Leagues  of 
Trade  and  Industry,  of  which  the  most  influential  have 
been  the  Control  Union  of  the  German  Wholesale 
Trade  and  the  Union  of  Exporters.  The  directorate 
will  consist  of  eight  representatives  of  trade  and  in- 
dustry and  eight  deputy  directors  who  will  be  named 
on  the  advice  of  the  various  trade  leagues." 

The  German  Chambers  of  Commerce  have  not  been 
idle.  As  evidence  of  their  enterprise  let  me  say  that 
four  weeks  after  the  Brest  treaty  had  been  signed  they 
had  established  a  sample  exhibition  at  Warsaw  for  the 
purpose  of  fostering  the  interest  of  the  Polish  popula- 
tion in  German  products,  and  more  especially  to  assist 
German  exporters  in  meeting  the  needs  of  the  near  and 
far  Eastern  markets  after  the  conclusion  of  peace.  The 
Association  of  German  Chambers  of  Commerce,  whose 
headquarters  are  at  Berlin,  has  opened  offices  in  Petro- 
grad,  Warsaw  and  Odessa,  where  useful  business  in- 
formation is  served  to  Teutonic  concerns. 

One  final  fact  will  round  out  this  brief  summary  of 
German  trade  exploitation :  The  German  business  eye 
looks  hungrily  at  Mexico.  In  various  German  news- 
papers during  the  past  year  I  have  seen  glowing  ac- 
counts of  the  rich  resources  of  our  southern  neighbor 
and  the  vast  opportunity  that  they  held  out  for  German 
development.  One  paper  made  the  point  that  during 
the  war  Mexico  was  compelled  to  get  her  goods  from 
the  United  States.  Then  it  continued :  "This  is  only 
a  temporary  necessity.     Mexico  knows  that  her  real 


CAN  GERMANY  COME  BACK?         263 

friend  is  Germany  and  will  know  where  to  turn  when 
peace  comes." 

That  Mexico  was  one  of  the  nests  of  German  espion- 
age and  propaganda  during  the  war  is  of  course  well 
known.  Undoubtedly  Germany  proposes  to  use  the 
same  base  for  an  equally  sinister  commercial  offensive 
in  the  future. 

Despite  the  astounding  disclosures  of  its  ramified 
and  underhand  activities  German  propaganda  has  not 
ceased  to  exist.  The  moment  the  armistice  was  signed 
it  turned  full  tilt  to  the  task  of  trying  to  make  out 
a  case  for  the  German  commercial  come-back,  and 
to  aid  the  discredited  German  industry  in  every 
possible  way.  No  handicap  is  too  great  for  the  Ger- 
man propagandists  to  try  to  overcome.  Just  as  soon 
as  the  American  Army  of  Occupation  crossed  the 
Rhine  it  met  a  blast  of  their  subsidized  hot  air.  In  this 
particular  instance  it  took  the  form  of  protests  that 
there  was  "never  any  real  feeling  of  hostility  toward 
the  United  States,"  and  that  "Germany  looks  to  Wilson 
for  a  square  deal."  The  Germans  knew  perfectly  well 
that  every  American  soldier  represented  a  group  of 
Americans  back  home,  and  if  the  soldier  in  Germany 
could  be  "sold"  it  would  reach  others.  Only  German 
propaganda  could  be  stupid  enough  to  frame  up  such 
an  imbecile  idea.  I  cite  this  episode  merely  to  show 
that  the  propaganda  institution  did  not  die  with  the  de- 
lusion of  German  might. 

This  German  propaganda,  I  might  add,  had  striking 
expression  in  certain  neutral  countries,  especially  those 
that  adjoined  Germany.     In  Holland  and  Switzerland 


264  PEACE  AND  BUSINESS 


the  system  was  and  remains  like  this :  The  manager, 
chief  buyer  or  head  floorwalker  of  every  important  re- 
tail store  is  usually  a  German.  His  job  was  to  create 
an  interest  in  German  goods.  If  native  or  Allied 
products  were  asked  for  it  was  up  to  him  to  recommend 
a  German  commodity  if  that  commodity  was  available. 
If  no  German  goods  were  accessible  these  commercial 
stool  pigeons  talked  German  goods.  Their  job  was, 
as  a  Swiss  admirably  put  it,  "to  keep  the  German  pot 
boiling."  I  myself  saw  a  number  of  these  German 
trade  propagandists  of  military  age.  When  I  asked 
why  they  were  not  serving  in  the  army  I  was  told  that 
they  had  obtained  special  exemption  because  the  Ger- 
man Government  regarded  their  service  to  German 
trade  more  useful  than  their  fighting  qualities. 

America  may  well  profit  by  these  revelations,  be- 
cause just  as  soon  as  peace  lifts  the  barrier  we  shall  be 
inundated  with  an  army  of  German  business  agents 
masquerading  as  tourists,  journalists,  envoys,  pro- 
fessors, scientists,  lecturers,  or  any  of  the  many  other 
labels  under  which  these  nefarious  mercenaries  trav- 
eled before  the  war.  Instead  of  exploiting  Kultur  they 
will  pose,  perhaps,  as  earnest  seekers  after  the  truth. 
Whatever  their  mission  they  will  bear  watching. 

The  survey  of  German  industry  on  the  threshold  of 
permanent  peace  must  include  an  appraisal  of  German 
finance.  This  phase  is  peculiarly  interesting  and  sig- 
nificant, first  because  of  the  immense  bill  for  damages 
that  will  be  presented  to  Germany;  second,  for  the 
reason  that,  as  in  no  other  country,  the  banks  are  the 
iull  and  accredited  partners  of  big  business.     What 


CAN  GERMANY  COME  BACK?         265 

two  or  three  Wall  Street  financial  institutions,  who  had 
the  vision  to  endow  American  world  trade,  did  in  a 
small  way  those  giant  Teutonic  banks  have  done  in  a 
world  way. 

Practically  all  the  huge  German  trusts  were  either 
instigated  or  fostered  by  one  of  the  four  famous  "D" 
banks — the  Deutsche,  Dresdener,  Disconto  and  the 
Darmstadter.  Each  of  these  banks  had  and  still  has  its 
line  of  pet  industries.  The  Deutsche,  for  example, 
specialized  in  electrical  machinery  and  public  utiHties; 
the  Disconto  in  foreign  railways;  the  Darmstadter  in 
narrow-gauge  railways  and  breweries;  and  the  Dres- 
dener in  water-transportation  lines.  Before  the  war 
these  banks  were  in  bitter  and  sometimes  costly  rivalry, 
but  it  was  never  a  competition  that  lost  a  dollar  for  the 
German  box  office  or  prevented  German  enterprise  or 
a  German  product  from  anchoring  somewhere.  The 
genius  of  German  finance  has  been  that  it  always  put 
German  pride  and  prestige  before  everything  else. 

The  signing  of  the  armistice  found  the  four  "D's" 
lined  up  for  a  common  fiscal  front.  They  do  not  love 
each  other  any  the  more,  but  it  is  the  fear  of  failure 
that  makes  them  kin.  I  do  not  mean  failure  in  the 
sense  of  bank  suspension,  but  I  mean  the  possibility 
that  the  Fatherland  is  irreparably  damaged  economi- 
cally. 

At  Zurich  one  of  the  foremost  Swiss  bankers,  who 
had  been  in  Germany  in  August  and  who  has  kept  in 
close  touch  with  the  financial  overlords  of  Berlin,  Dres- 
den and  Hamburg,  made  the  following  statement  to  me 
regarding  the  German  banking  situation ; 


266  PEACE  AND  BUSINESS 

I.—  I  —  .    .  — — •-   — ^  -I.      I  ■■    ,  .1    ^^   I  a 

"The  German  Anny  is  defeated,  but  German  busi- 
ness cunning — and  more  especially  German  financial 
astuteness — is  far  from  being  beaten.  The  great  Ger- 
man banks  are  stronger  to-day  than  they  have  ever 
been  before.  The  Deutsche  Bank,  for  example,  has 
deposits  of  nearly  2,000,000,000  marks.  This  means 
that  German  business  is  far  from  being  crippled.  When 
I  was  last  in  Germany  the  Deutsche  Bank  was  laying 
plans  for  a  world-wide  campaign  with  the  idea  of  cap- 
turing trade  through  neutral  channels.  All  the  big 
German  financial  institutions  have  developed,  rather 
than  reduced,  their  representations  in  the  neutral  coun- 
tries. When  you  consider  that  the  German  banks 
dominate  and  control  German  industry  you  can  under- 
stand that  their  great  strength  to-day  will  be  a  tre- 
mendous factor  in  the  restoration  of  German  business 
and  in  the  rebuilding  of  German  international  trade," 

One  menace  that  threatens  us  in  this  hour  of  inter- 
national economic  readjustment  lies  in  a  pernicious 
feature  of  the  German  financial  system.  The  Teutonic 
scheme  in  foreign  countries  has  always  been  to  convert 
a  shoe  string  into  a  golden  cable.  In  other  words,  she 
has  made  a  small  amount  of  capital  do  more  work  and 
establish  more  power  than  any  competitor.  The  case 
of  Italy  furnishes  the  most  striking  example  of  this 
process. 

So  far  as  any  visitation  of  the  horrors  of  war  is 
concerned  Germany  is  unscathed.  She  took  good  care 
to  see  that  they  were  all  written  elsewhere.  Compared 
with  the  Allies  she  has  not  fared  badly.     She  is  the 


CAN  GERMANY  COME  BACK?         2(^7 

only  one  of  the  European  belligerents  whose  war  debt, 
with  trivial  exceptions,  is  owed  at  home.  Her  financing 
for  the  indemnities  that  she  will  have  to  pay,  and  for 
the  payment  of  the  fixed  charges  on  her  debt,  can  be 
put  ahead  of  the  war  bonds.  The  self-sufficiency, 
which  was  one  of  the  wonders  of  wartime  Germany, 
will  probably  continue  with  finance.  It  is  lucky  for  the 
Germans  that  it  will,  because  the  German  bank  seeking 
to  underwrite  a  Restoration  Loan  outside  Germany 
would  be  about  as  welcome  as  a  raiding  Zeppelin  over 
a  defenseless  town. 

This  discussion  of  German  finance  naturally  leads  to 
the  all-important  question,  "Can  Germany  pay  for  the 
outrages  she  has  committed?"  Though  it  is  not  gen- 
erally known,  Germany  was  able  to  wage  war  more 
cheaply,  perhaps,  than  any  other  country.  It  was  one 
of  the  benefits  of  the  self-sufficiency  of  her  militarism. 
France  and  England,  for  example,  had  to  buy  shells  in 
the  United  States.  Germany  got  them  all  within  her 
own  confines. 

In  October,  19 17,  the  well-known  French  news- 
paper. Information,  published  a  striking  summary  of 
the  costs  of  three  years  of  war  per  head  of  population. 
It  disclosed  the  fact  that  Germany  had  spent  $320  per 
head,  or  $120  less  than  France.  France  had  spent 
$440  per  head,  or  38  per  cent  more  than  Germany. 
Britain  had  expended  $555  per  head,  or  $235  more 
than  Germany. 

But  it  is  a  poor  lane  that  has  no  turning.  Germany 
now  faces  the  day  of  reckoning.    The  most  staggering 


268  PEACE  AND  BUSINESS 


indemnity  in  the  history  of  the  world  is  rolled  up 
against  her.  In  meeting  it  the  German  people,  and 
more  especially  their  late  military  masters,  will  have 
ample  opportunity  to  reflect  on  their  past  performances. 

Analyze  Germany's  resources  with  special  reference 
to  the  possibility  of  the  payment  of  her  debt  to  human- 
ity and  you  discover  that  despite  her  barking  about 
bankruptcy  she  is  not  prostrate.  For  one  thing  the 
value  of  her  neutral  resources  is  computed  to  be  not 
less  than  $2,500,000,000.  She  has  proved  herself 
capable  of  miracle-working  in  the  past.  Her  produc- 
tion of  coal,  for  example,  rose  from  73,000,000  tons 
in  1885  to  273,000,000  tons  in  1913.  Her  output  of 
iron  increased  from  3,600,000  tons  in  J 885  to  nearly 
20,000,000  tons  in  19 13. 

Germany's  financial  debt  to  civilization  seems  stu- 
pendous. Yet  we  have  grown  so  accustomed  to  titanic 
numerals  that  they  should  not  astound  us  now.  Nor 
is  the  payment  insuperable.  To  quote  a  well-known 
British  authority: 

"When  we  reflect  that  the  annual  cost  to  us  of  the 
Napoleonic  Wars  amounted  to  only  about  three  days 
of  our  recent  war  expenditure  is  it  fantastic  to  assume 
that  in  the  space  of,  say,  fifty  years  the  figures  that 
appear  so  overwhelming  to-day  will  bear  the  same  com- 
paratively insignificant  relation  to  the  future  wealth  of 
Germany  as  our  own  war  debt  of  a  century  ago  does 
to  our  present  resources? 

"Germany  will  not  only  save  the  whole  of  her  past 


CAN  GERMANY  COME  BACK?         269 


military  and  naval  expenditure,  but  at  a  moderate  esti- 
mate the  release  of  the  man  power  and  money  previ- 
ously devoted  to  these  unproductive  objects  should  re- 
sult in  the  production  of  four  or  five  times  the  amount 
in  national  wealth,  if  devoted  to  industry." 


270  PEACE  AND  BUSINESS 


IV 


Turn  to  the  other  side  of  the  picture  and  inventory 
the  handicaps  that  will  beset  the  revealed  Germany- 
struggling  for  rehabilitation.  Towering  above  them 
all  is  the  world's  loss  of  faith  in  her.  When  faith  is 
lost  all  is  lost.  The  uppermost  question  on  the  uni- 
versal lip  to-day  is:  "Who  will  ever  trust  a  German 
again  ?" 

I  had  a  striking  evidence  of  this  conviction  when  I 
returned  to  the  United  States  from  my  last  trip  to  the 
war.  I  was  abroad  when  the  armistice  was  signed. 
After  four  years  of  wartime  transatlantic  commuting, 
with  all  the  hazards  and  hardships  that  attended  it,  I 
felt  that  at  last  I  would  have  a  voyage  with  some  of 
the  compensations  of  peace.  I  had  visions  of  a  final 
divorce  from  a  life  belt,  lighted  decks  and  immunity 
from  that  traveling  human  pest  who  saw  a  periscope, 
waking  and  sleeping.  It  was  a  vain  hope.  Though 
we  sailed  from  Liverpool  on  November  twenty-third — 
exactly  twelve  days  after  the  end  of  the  war — and 
despite  the  fact  that  the  German  Fleet — ^high-sea  and 
submarine — had  been  surrendered,  we  took  every  pre- 
caution of  war.  We  started  in  a  convoy  that  was 
escorted  by  destroyers ;  we  had  the  usual  lifeboat  drills ; 
not  a  light  was  shown  from  the  time  we  left  the  mouth 
of  the  Mersey  until  we  sighted  Sandy  Hook.  When 
J  asked  one  of  the  ship's  officers  the  reason  for  this 


CAN  GERMANY  COME  BACK?         271 


performance,  he  said  :  "We  are  not  taking  any  chances 
with  the  Germans." 

This  lack  of  faith  means  the  loss  of  good  will,  which, 
after  necessity,  is  the  first  essential  to  business.  It 
seems  likely  that  for  a  good  while  at  least  the  British 
Empire,  France,  and  in  all  likelihood  the  whole  United 
States,  will  not  have  any  hectic  desire  to  buy  German 
goods.  These  three  markets,  with  Russia  and  the 
Powers  allied  with  the  late  Kaiser's  government,  ab- 
sorbed most  of  the  German  exports.  What  will  be- 
come of  the  surplus  German  stocks? 

Right  here  we  touch  the  most  serious  obstacle  to  the 
German  economic  regeneration;  and  I  will  tell  you 
why.  Germany  began  as  an  agricultural  nation.  As 
soon  as  she  became  stung  with  the  ambition  to  rule 
the  world  she  turned  to  industry.  The  result  is  that 
more  than  25,000,000  of  her  population  of  nearly 
70,000,000  are  dependent  upon  foreign  food.  Through 
the  same  process  the  prosperity  of  the  nation  is  abso- 
lutely dependent  upon  the  outside  absorption  of  more 
than  fifty  per  cent  of  her  manufactured  products.  Her 
whole  economic  integrity  depends  upon  a  purchasing 
power  that  is  to-day  not  only  largely  anti-German  but 
filled  with  rage  and  resentment.  Germany  must  there- 
fore find  new  markets  or  go  back  to  the  land  for  sub- 
sistence. The  phenomenal  growth  of  her  population 
demands  a  constantly  increasing  territory.  Her  col- 
onies are  lost  to  her  forever.    What  is  she  to  do? 

Another  important  fact  enters  into  the  considera- 
tion of  this  all-necessary  export  trade.  The  great  bulk 
of  it  was  reared  upon  a  peaceful  penetration  in  which 


272  PEACE  AND  BUSINESS 

the  German  was  a  past  master.  Everywhere  he  took 
social  root  and  became  part  and  parcel  of  the  country 
upon  which  he  had  economic  designs.  It  was  before 
the  mask  was  torn  from  the  German  face  and  when 
it  was  an  easy  matter  to  pose  as  a  loyal  and  naturalized 
American,  Englishman,  Italian  or  Brazilian.  All  the 
while  he  was  one  hundred  per  cent  German,  an  agent 
of  the  German  Government,  and  ready  to  do  its  bidding 
whatever  the  assignment,  be  it  trade  or  trickery.  "For 
Kaiser  and  Fatherland"  was  his  inspiration,  '"Deutsch- 
land  iiber  Alles"  his  motto. 

This  penetration — full  brother  to  the  vast  propa- 
ganda which  sought  to  plant  German  "ideals"  of  art 
and  culture — is  now  discredited.  The  world  is  wise  to 
it.  It  will  be  exceedingly  difficult  for  the  boche — the 
name  will  always  cling  to  him — to  reestablish  those 
human  bases  which  were  as  destructive  as  naval  bases. 
If  nations  profit  by  their  errors  and  ignorances  of  the 
past  they  will  set  up  a  rigorous  censorship  and  regis- 
tration of  aliens  that  will  make  future  German  mis- 
chief-making impossible.  If  a  German  wants  to  pene- 
trate he  must  be  required  to  do  it  with  his  flags  un- 
furled, and  not  behind  the  camouflage  of  a  pretended 
citizenship  or  a  special  purpose. 

This  loss  of  social  leverage  is  matched  by  a  loss 
equally  acute.  I  mean  the  passing  of  the  monopoly 
on  those  products  that  were  once  exclusively  German. 
Thanks  to  the  war  we  have  found  the  key  to  the 
secrets  of  dyes,  drugs,  chemicals,  potash,  optical  and 
bacteriological  glass.  The  formulas  of  all  these  articles 
are  in  American  hands,  being  made  in  American  labor- 


CAN  GERMANY  COME  BACK?         273 

atories,  and  for  American  consumption.  Germany  will 
either  have  to  undersell  her  new  competitors  or  depend 
upon  her  army  of  scientific  investigators  to  devise  sub- 
stitutes. 

Gone,  too,  is  that  dream  of  a  "Mittel-Europa"  which 
was  to  crown  the  Germanic  conquest  of  the  world. 
Not  only  is  this  illusion  shattered  but  for  a  long  time 
at  least  Germany  will  find  only  antagonism  and  re- 
proach in  Austria  and  Turkey,  who  were  her  one-time 
willing  dupes  and  tools.  The  American  participation 
in  the  war,  expressed  in  the  rebuilding  of  French  ports, 
has  opened  up  a  new  highway  for  our  products  to  the 
Near  East.  It  fastens  still  another  thorn  into  the  side 
of  the  defeated  and  discounted  Germany. 

Even  if  Germany  still  retained  some  of  the  world's 
goodwill  and  had  merchandise  ready  for  export  she 
faces  the  supreme  humiliation  of  knowing  that  her 
mercantile  marine — once  her  pride  and  joy — is  scat- 
tered throughout  the  seven  seas,  flying  the  flags  of 
nations  that  confuted  her  sinister  scheme.  The  exac- 
tion of  .ton  for  ton  leaves  her  well-nigh  stripped  of 
ships.  Many  years  ago  the  Kaiser  said :  "Germany's 
destiny  is  on  the  seas."     To-day  the  sea  is  her  doom. 

You  have  now  seen  a  national  balance  sheet  on 
which  the  liabilities  far  outweigh  the  assets.  In  addi- 
tion, this  German  corporation — to  stick  to  the  phrase- 
ology of  business — must  henceforth  carry  an  overhead 
of  ignominy  that  in  the  last  analysis  is  the  most  serious 
and  permanent  of  all  its  handicaps. 

Dark  as  seems  the  economic  outlook  for  Germany 
it  is  no  time  for  us  to  relax  and  ease  our  minds  with 


274  PEACE  AND  BUSINESS 

the  realization  that  because  the  Teuton  is  down  he  will 
remain  down.  Eternal  vigilance  must  be  the  watch- 
word of  the  future. 

In  order  to  pay  the  indemnities  that  an  outraged 
civilization  imposes  upon  her  Germany  must  be  per- 
mitted a  reasonable  degree  of  recovery.  She  is  pre- 
cisely like  a  bankrupt  concern  with  a  huge  list  of  cred- 
itors. These  creditors  will  lose  everything  if  the  con- 
cern is  crushed.  This  does  not  mean,  however,  that 
Germany  must  ever  have  the  opportunity  to  swing 
back  to  her  one-time  international  prestige.  A  far- 
flung  German  prosperity  means  a  cocksure  Germany 
with  a  chip  on  her  shoulder. 

The  war  is  won.  By  keeping  Germany  economically 
curbed  it  will  remain  won. 


VIII — Americas  Ojjportunitz/ 


THROUGHOUT  the  preceding  chapters  has  run 
the  refrain  :  "What  is  the  American  business  op- 
portunity after  the  war?"  So  far  as  England, 
France,  Switzerland,  Italy,  Holland  and  Spain  are  con- 
cerned the  query  has  been  answered.  It  only  remains  to 
discuss  the  larger  aspects  of  our  new  world  economic 
relation. 

When  the  great  war  staggered  civilization  in  19 14 
America  was  a  novice  among  tlie  international  trade 
builders.  As  soon  as  Europe  saw  red  there  was  a 
hectic  scramble  for  both  raw  and  finished  materials. 
We  alone  stood  ready  to  do  business  at  the  universal 
trade  counter.  A  vast  prosperity  literally  dropped  into 
our  laps.  It  was  a  self-selling  proposition,  proof 
against  all  the  errors  of  judgment  and  otherwise  that 
we  had  committed  in  seeking  world  commerce. 

America's  entry  into  the  war  only  broadened  our 
trade  horizon  for  the  reason  that  we  had  to  expand 
an  already  enlarged  productive  machine.  This  machine 
can  produce  the  munitions  of  peace  as  readily  as  it 
achieved  a  quantity  output  of  the  munitions  of  war. 
Hence  the  great  struggle  not  only  heightened  our 
nationalism  but  quickened  the  industrial  conscience. 

In  America,  as  in  England,  the  war  served  a  con- 

275 


276  PEACE  AND  BUSINESS 

structive  purpose.  For  one  thing  it  brought  home  to 
Washington  an  appreciation  of  the  enormous  asset  for 
the  pubHc  good  that  existed  in  that  one-time  target  of 
legislative  and  political  attack  and  which  is  known  as 
Big  Business. 

Before  the  war  corporation-baiting  was  one  of  our 
favorite  sports.  Individual  capitalist  and  progressive 
institution  shared  alike  in  this  reckless  persecution  of 
what  was  nothing  more  or  less  than  vision  and  energy. 
The  fact  that  a  man  had  more  foresight  and  courage 
than  his  fellow  and  thereby  amassed  a  fortune  singled 
him  out  as  a  "malefactor"  and  therefore  an  undesir- 
able citizen.  Yet  the  very  corporations  that  suffered 
the  most  were  those  that  had  planted  the  flag  of 
American  commerce  throughout  the  seven  seas. 

The  moment  we  got  into  the  war  the  need  of  busi- 
ness training  and  experience  was  recognized  as  an 
essential  to  the  successful  conduct  of  that  war.  A 
hurry-up  call  flashed  from  sea  to  sea  and  the  result 
was  a  mobihzation  of  business  brains  for  the  national 
service  such  as  no  other  country  has  ever  witnessed 
before.  The  Hurleys,  Davisons,  Baruchs,  Ryans,  Stet- 
tiniuses,  Thornes,  Deedses,  and  Schwabs  were  merely 
types  of  the  captains  of  commerce  who  flocked  un- 
selfishly to  the  standard  of  war.  But  for  these  men 
we  would  not  have  registered  our  mighty  war  effort. 
Their  brothers  abroad  likewise  made  possible  the 
Services  of  Supply  that  fed,  equipped  and  transported 
the  American  Expeditionary  Forces  in  France. 

It  is  an  ill  wind  that  blows  nobody  good.  During 
the  war  Washington  realized  that  the  so-called  Amer- 


AMERICA'S  OPPORTUNITY  277 


ican  trust  was  not  the  cloven- footed  institution  that  the 
self-seeking  politician  and  the  unsuccessful  competitor 
labeled  it.  Practically  all  the  Government  suits  insti- 
tuted under  the  Sherman  law  were  dropped  and  the 
indications  are  that  they  will  not  be  resumed.  This  is 
a  definite  advance  in  our  preparedness  to  meet  the 
bitter  commercial  competition  that  has  developed  with 
peace.  The  enactment  of  the  Webb  Law,  which  en- 
ables American  corporations  to  unite  in  the  campaign 
for  foreign  trade  is  just  another  evidence  of  the  dawn 
of  reason.  Without  this  legalized  coordination  we 
would  be  at  the  mercy  of  the  so-called  cartel — or 
syndicate — which  was  one  of  the  props  of  Germany's 
deep-rooted  economic  penetration. 

One  great  defect  in  our  old-time  overseas  business 
adventuring  was  a  lack  of  financial  facilities.  We  were 
compelled  to  do  business  with  foreign  banks,  who,  by 
the  circumstance  of  their  organization,  became  familiar 
with  all  our  trade  secrets.  Most  of  these  banks  were 
either  British  or  German  owned.  A  bank  is  seldom  a 
philanthropist.  No  wonder  we  were  under-sold  and 
out-bid  everywhere. 

The  war  taught  us  to  do  international  banking  in 
terms  of  billions,  and  what  is  more  important,  to  set 
up  our  own  financial  outposts.  The  branch  banks  that 
we  established  for  the  convenience  of  our  soldiers  in 
France  mark  the  beginning  of  a  chain  of  institutions 
that  will  encircle  the  globe.  The  precedent  has  been 
established  in  South  America  and  Italy  by  the  National 
City  Bank  of  New  York.  Institutions  of  the  caliber 
of  the  Guaranty  Trust  Company  are  following  it  up. 


278  PEACE  AND  BUSINESS 

The  branch  bank  is  not  only  a  permanent  advertise- 
ment of  American  enterprise  but  it  is  Hkewise  a  defi- 
nite salesman.  It  is  the  magnet  that  attracts  business 
opportunities. 

Wall  Street  has  learned  to  look  beyond  the  confines 
of  Manhattan  for  its  great  commercial  underwriting. 
Such  organizations  as  the  American  International  Cor- 
poration and  the  new  American-Foreign  Trade  Corpo- 
ration, formed  to  barter  and  trade  with  the  Near  East, 
indicate  that  we  are  coming  into  an  era  of  world-wide 
undertakings  which  will  help  to  stabilize  and  make  per- 
manent the  trade  thrust  upon  us  during  the  four  years 
of  war.  No  less  indicative  of  the  new  spirit  is  the 
French-American  Banking  Corporation  organized  to 
exploit  Franco-American  business  interests. 

No  war-born  asset,  however,  is  quite  so  important 
as  the  establishment  of  a  merchant  marine.  Prior  to 
the  war  9.7  per  cent  of  our  total  exports  was  carried 
in  American  bottoms.  If  our  program  of  shipping 
construction  is  carried  out  we  will  have  sufficient  ves- 
sels to  move  more  than  50  per  cent  of  all  our  commerce 
in  vessels  flying  the  American  flag.  Yankee  sover- 
eignty is  coming  back  to  the  high  seas  that  it  domi- 
nated back  in  the  old  days  of  the  clipper  ships. 

But  all  this  equipment,  admirable  as  it  is,  will  be 
impotent  if  we  do  not  have  a  definite  foreign  trade 
policy.  This  means,  first  of  all,  that  we  must  train  our 
youth  for  commercial  careers  abroad.  One  reason 
why  Germany  was  able  to  achieve  a  peaceful  conquest 
of  the  world  was  that  she  made  trade  education  a  part 
of  the  course  of  instruction  in  her  schools  and  colleges. 


AMERICA'S  OPPORTUNITY  279 

It  is  a  vital  phase  of  the  vocational  system.  If  the  Ger- 
man youth,  for  example,  was  booked  for  work  in  the 
Philippines,  he  was  taught  Spanish  and  English  along 
with  his  geography.  More  than  this,  he  knew  long  be- 
fore he  was  in  his  teens  that  he  was  to  dedicate  his  life 
to  export  business.  All  his  training,  therefore,  was  in 
that  direction.  This  means  that  we  must  make  of  busi- 
ness, as  we  must  make  of  diplomacy,  a  definite  and 
honorable  calling. 

Both  Germany  and  England  have  proved  that  an 
efficient  Consular  service  is  an  inseparable  link  in  the 
international  business  chain.  Happily,  the  State  De- 
partment has  awakened  to  this  fact.  It  has  asked  for 
an  increase  of  more  than  $1,000,000  in  its  next  appro- 
priation in  order  to  expand  its  foreign  service  program. 
It  proposes  to  follow  Britain's  lead  and  establish  a  new 
office  known  as  "Economic  Expert."  They  will  per- 
form some  of  the  functions  now  performed  by  the  so- 
called  "Commercial  Attaches."  Unfortunately  we 
have  only  had  these  Attaches  at  Paris,  London,  Petro- 
grad  and  Buenos  Ayres.  All  of  them  labored  under  a 
hopelessly  inadequate  equipment  and  were  invariably 
handicapped  by  a  small  staff.  The  fact  that  we  are 
increasing  our  whole  consular  service  means  that  our 
business  men  scattered  throughout  the  world  will 
henceforth  have  the  same  aid  and  cooperation  that 
have  hitherto  been  bestowed  on  their  British  and  Ger- 
man competitors. 

We  can  have  no  definite  foreign  trade  policy,  how- 
ever, without  enlisting  the  all-important  adjunct  of  a 
knowledge  of  foreign  languages.     For  years  most  of 


28o  PEACE  AND  BUSINESS 

our  "special  agents"  abroad  did  business  with  the  aid 
of  interpreters.  Often  these  interpreters  were  crooks 
in  the  employ  of  rivals.  A  foreigner  is  always  pleased 
and  flattered  when  you  can  talk  to  him  in  his  own 
language.  The  simple  fact  that  two  million  Americans 
have  gone  to  France  as  soldiers  and  picked  up  a  smat- 
tering of  French  means  that  henceforth  our  business 
relations  with  that  gallant  republic  will  not  only  be 
bigger  and  broader  but  much  more  intelligent. 

The  new  world  business  opportunity  revealed  by  the 
war  will  help  to  invest  commerce  with  a  whole  new 
dignity  and  distinction.  England  discovered  during 
the  war  that  trade  is  not  a  vulgar  thing  but  a  dynamic 
force  that  is  a  bulwark  against  the  enemy  in  more 
ways  than  one.  The  hand  that  tended  the  shop  was  the 
hand  that  stopped  the  German.  What  Napoleon  called 
"a  nation  of  shop-keepers"  has  turned  to  a  revival  of 
its  one-time  commercial  supremacy  with  an  energy 
and  a  faith  that,  as  I  have  frequently  emphasized  else- 
where in  this  book,  will  make  her  our  most  formidable 
adversary. 

We  needed  no  war  stimulus  to  bring  home  the  real- 
ization that  business  Hes  at  the  root  of  everything.  The 
most  fascinating  of  all  American  romances  is  the  nar- 
rative of  the  self-made  who  rose  from  forge  and  coun- 
ter to  be  the  stewards  of  our  wealth.  We  made  war  a 
vast  business.  In  the  same  way  we  can  make  peace 
an  enterprise  that  will  achieve  a  glory  comparable  with 
the  valor  of  our  fighting  men. 


AMERICA'S  OPPORTUNITY  281 


II 

One  phase  of  American  preparedness  for  the  busi- 
ness battles  of  peace  demands  a  little  chapter  all  its 
own.  I  mean  that  section  of  our  declaration  of  inde- 
pendence of  German  industry  which  is  written  in  the 
establishment  of  our  dyestuff  industry.  Nowhere  has 
a  war-time  revelation  been  more  brilliantly  or  patri- 
otically capitalized  than  in  this  demonstration  of 
American  courage  and  resourcefulness. 

No  man  need  be  told  at  this  late  date  that  among 
the  shocks  that  followed  the  outbreak  of  war  in  1914 
was  the  tragic  realization  that  the  world  was  depend- 
ent upon  Germany  for  practically  all  her  dyestuffs. 
With  bribery,  coercion,  and  the  employment  of  her 
whole  ramified  secret  service  system,  Industrial  Ger- 
many, which  was  the  full-partner  of  Militaristic 
Germany,  had  made  America,  England  and  France  her 
vassals  in  the  matter  of  these  essential  adjuncts  to 
textile  manufacture. 

Germany  was  wise  in  establishing  this  thralldom. 
Every  dye  factory  is  a  potential  munitions  plant.  By 
having  what  amounted  to  a  monopoly  on  dye-making 
she  not  only  fortified  her  immense  fighting  machine 
and  made  herself  self-sufficient,  but  at  the  same  time 
kept  America,  France,  and  England  from  setting  up  a 
similar  bulwark.  England  and  France  declared  war  at 
once  and  could  expect  no  dyes  from  their  enemy. 

With  America  it  was  different.     We  were  then  a 


282  PEACE  AND  BUSINESS 

neutral  and  had  a  right  to  purchase  these  needed  sup- 
pHes.  Germany,  however,  immediately  placed  an  em- 
bargo on  the  export  of  dyes.  Her  purpose  was  to 
create  such  discontent  and  dissatisfaction  in  America 
that  we  would  be  compelled  to  request  England  to 
lighten  the  blockade  which  had  formed  an  iron  ring 
around  Germany.  Just  as  she  made  the  mistake  of 
invading  Belgium,  ravaging  France,  and  forcing 
America  and  England  into  the  war,  so  did  she  commit 
the  colossal  error  of  believing  that  we  would  impotently 
submit  to  such  tactics. 

For  years  an  infant  dye  industry  had  eked  out  a 
precarious  existence  in  the  United  States.  One  reason 
why  it  had  never  been  permitted  to  raise  its  head  was 
that  Germany  took  precious  good  care  to  absorb  every 
new  concern  or  make  it  difficult  and  costly  for  those 
who  survived  to  carry  on.  To  quote  Francis  P.  Gar- 
van,  the  Alien  Property  Custodian : 

"Germany  has  misused  our  patent  system,  just  as 
she  had  misused  and  violated  our  Sherman  Law,  our 
antidumping  laws,  our  antibribery  acts,  our  business 
code,  and  our  common  code  of  honesty.  She  had 
taken  out  patents  for  all  her  developments,  covering,  in 
many  instances,  not  only  the  processes,  to  prevent  man- 
ufacture here,  but  also  the  product,  to  prevent  our 
taking  advantage  of  any  possible  development  in  the 
dye  industry  of  other  countries." 

The  net  result  was  that  when  hostilities  began  we 
were  importing  90  per  cent  of  all  the  dyes  we  used 
from  Germany,  The  total  amount  aggregated  29,000 
tons.    This  is  not  a  great  amount  as  figures  go  these 


AMERICA'S  OPPORTUNITY  28-, 


o 


days  but  more  than  $3,000,000,000  worth  of  business 
was  absolutely  dependent  upon  these  dyes. 

Long  before  we  took  our  place  in  the  battle  line  of 
freedom  we  had  begun  to  expand  our  dye  industry. 
The  moment  we  came  to  grips  with  Germany  a  pow- 
erful weapon  was  placed  in  our  hands.  Thousands  of 
valuable  German  dye  patents  were  owned  in  America. 
The  great  dye  concerns,  six  in  number,  all  had  branches 
over  here.  These  patents  were  seized  by  the  Alien 
Property  Custodian;  sold  to  one  hundred  per  cent 
Americans,  and  now  form  the  backbone  of  an  industry 
which  includes  ninety  firms  and  which  represents  a 
capitalization  of  nearly  $500,000,000. 

Out  of  this  defiance  of  German  commercial  tyranny 
has  developed  a  novel  experiment  in  the  real  democracy 
of  industry.  The  German  patents — they  number  more 
than  4,000 — which  apply  to  chemistry  have  been  sold 
by  the  Alien  Property  Custodian  to  a  quasi-trustee  cor- 
poration known  as  the  Chemical  Foundation.  It  is 
capitalized  at  $500,000,  $400,000  being  in  6  per  cent 
preferred  stock  and  $100,000  in  common  stock  which 
is  also  limited  to  6  per  cent. 

All  this  stock  has  been  underwritten  by  members  of 
the  American  Dye  Institute  and  has  been  distributed 
to  the  dye  producers.  Eventually  it  will  also  be  held 
by  the  consumers.  It  is  the  intention  that  no  one  will 
own  more  than  one  thousand  dollars  worth  of  stock, 
that  is,  eight  hundred  preferred  and  two  hundred  com- 
mon. By  this  admirable  scheme  discrimination  in 
favor  of  the  large  producer  or  consumer  is  automati- 
cally eliminated. 


284  PEACE  AND  BUSINESS 

AH  license  fees  for  the  use  of  patents  will  be  em- 
ployed to  take  up  the  preferred  stock.  All  surplus 
thereafter  above  six  per  cent  will  be  expended  for  the 
development  of  research  and  encouragement  of  the 
chemical  industry  in  America.  The  Chemical  Foun- 
dation exemplifies  the  highest  commercial  and  scien- 
tific patriotism. 

The  stock  is  controlled  by  a  Board  of  Trustees 
consisting  of  Otto  Bannard,  President  of  the  New 
York  Trust  Company,  Chairman;  Cleveland  H.  Dodge; 
George  L.  Ingraham,  late  Presiding  Justice  of  the 
Appellate  Division  of  the  New  York  Supreme  Court; 
Ralph  Stone,  President  of  the  Detroit  Trust  Com- 
pany; and  Benjamin  Griswold,  of  Brown  &  Son,  Balti- 
more. They  have  served  as  the  Advisory  Sales  Com- 
mittee of  the  Alien  Property  Custodian  for  over  a  year. 
The  counsel  is  Joseph  H.  Choate,  son  of  the  late  Am- 
bassador to  the  Court  at  St.  James,  while  the  patent 
counsel  is  Ramsay  Hoguet. 

The  Foundation  will  license  any  competent  and  loyal 
American  individual  or  corporation  that  seeks  to  enter 
the  business.  More  than  this,  it  has  brought  about 
for  the  first  time  an  adequate  protection  of  this  new 
industry  in  the  shape  of  a  licensing  system  and  a  tariff. 
In  this  way  German  dumping  will  be  prevented  and 
permanent  immunity  obtained  from  the  outrageous 
monopoly  which  existed  before  the  war.  It  has  like- 
wise established  an  Intelligence  Department  which  will 
co-ordinate,  preserve  and  utilize  all  the  chemical  infor- 
mation gathered  by  every  government  department 
during  the  war,  and,  what  is  more  important,  make 


AMERICA'S  OPPORTUNITY  285 

that  information  accessible  to  the  whole  American 
public. 

No  activity  of  the  Chemical  Foundation  is  more  sig- 
nificant than  its  Laboratory  Census.  This  perform- 
ance will  disclose  precisely  what  facilities  are  available 
in  America  for  the  larger  development  of  commercial 
chemistry.  Here  we  have  taken  a  sheaf  from  the  Ger- 
man book.  The  real  secret  of  the  Germanic  world- 
wide trade  conquest  lay  in  the  harnessing  up  of  her 
whole  scientific  resource  and  equipment  to  the  needs 
of  business,  which  meant  that  they  were  geared  also 
to  the  needs  of  war.  This  closer  union  in  America 
between  the  university  and  the  factory  means  that 
henceforth  we  can  never  again  be  at  the  mercy  of  any 
foreign  power  in  the  matter  of  the  essentials  to  manu- 
facture and  to  war. 

Thanks  to  the  Chemical  Foundation  the  Chemical 
Warfare  Service  which,  in  an  incredibly  short  time, 
enabled  America  to  cope  with  the  most  frightful  of 
Germany's  first  aids  to  destruction,  will  not  be 
"scrapped."  It  is  no  secret  now  that  the  entire  German 
gas  program  from  the  original  chlorine  cloud  down  to 
mustard  gas  was  devised  and  made  possible  in  the 
laboratories  and  factories  of  her  Dye  Trust.  This  fact 
was  disclosed  by  the  investigation  of  the  British  Mis- 
sion appointed  to  visit  the  enemy  chemical  factories  in 
the  occupied  zone  immediately  after  the  signing  of  the 
armistice.  This  disclosure  is  the  best  possible  argu- 
ment in  favor  of  an  ail-American  dye  industry  which 
will  enable  us  to  meet  any  emergency  in  the  future.  We 
are  going  into  an  era  of  disarmament.     But  disarma- 


286  PEACE  AND  BUSINESS 

ment  and  a  dozen  Leagues  of  Nations  will  not  prevent 
war.  So  long  as  avarice,  desire  and  the  fighting  spirit 
lurk  in  the  heart  of  man  so  long  will  permanent  peace 
remain  the  great  illusion.  Hence  our  new  dye  indus- 
try is  a  step  toward  that  self-preservation  which  is  the 
first  law  of  nations  as  it  is  of  Nature. 

Dyes  only  represent  one  of  the  war-born  American 
industries.  We  have  made  ourselves  independent  of 
Germany  in  optical  glass,  knitting  needles  and  toys. 
All  contribute  to  an  industrial  emancipation  that  is 
one  of  the  many  permanent  compensations  of  those 
years  of  agony  and  sacrifice. 


AMERICA'S  OPPORTUNITY  287 


HI 

Just  as  the  Great  War  was  rooted  in  business  so 
must  the  Great  Peace  for  which  the  war  was  fought, 
be  bulwarked  by  business.  If  we  are  to  rear  a  per- 
manent safeguard  against  the  aggression  that  pkmged 
the  whole  world  into  disaster  we  must  establish  an 
economic  structure  that  is  wholly  and  uncompromis- 
ingly American. 

Although  the  Peace  Treaty  prohibits  propaganda  by 
forbidding  the  existence  of  German  militaristic  socie- 
ties it  does  not  discount  the  social  and  economic  pene- 
tration with  which  Germany  poisoned  the  world  for 
forty  years.  This  propaganda,  so  far  as  the  United 
States  is  affected,  only  lay  dormant  throughout  the 
war.    Its  hideous  head  is  already  lifted. 

Remember  that  Germany,  as  I  disclosed  in  the  chap- 
ter on  Spain,  is  the  prize  world  trouble-maker.  She 
was  one  of  the  instigators  of  the  whole  Red  epoch  of 
unrest  which  stretched  from  Siberia  down  through 
Russia  into  Hungary.  It  was  part  of  the  club  that 
Germany  cunningly  constructed  to  hold  menacingly- 
over  the  Peace  Conference  and  wring  undeserved  con- 
cessions.   Happily  it  failed  of  its  purpose. 

Let  me  illustrate  with  a  piece  of  unwritten  history. 
When  I  was  in  Switzerland  in  November,  1918,  I  dis- 
covered that  during  the  final  German  peace  offensive, 
waged  about  the  time  of  the  battle  of  Chateau-Thierry, 
the  slogan  of  the  German  propagandist  and  peace- 


288  PEACE  AND  BUSINESS 

monger  in  substance,  was : — "Unless  you  make  a  peace 
with  Germany  now,  we  will  plunge  the  world  into  Bol- 
shevism.    It  means  international  economic  disaster." 

Germany  did  not  get  away  with  this  threat,  although 
she  succeeded  in  stirring  up  serious  industrial  strife 
in  Switzerland.  But  it  proves  what  every  man  who 
has  studied  German  propaganda  knows,  that  Bolshev- 
ism which  developed  into  the  universal  menace,  is  a 
German  product,  German  framed  and  German 
financed,  the  prize  package  of  discord  that  Teutonic 
cunning  has  handed  the  world. 

I  was  in  Petrograd  when  Lenine  arrived.  Figura- 
tively, I  watched  him  open  his  Pandora  box  of  dissen- 
sion and  let  loose  a  poison  gas  more  deadly  than  any 
chemical  let  loose  on  field  of  battle.  I  have  smelled  its 
fumes  in  half  a  dozen  different  countries  since  that 
time.  Nowhere  have  they  been  more  deadly  than  in 
this  United  States  of  ours,  where  the  viper  of  Bolshev- 
ism rears  its  hideous  head  as  the  I.  W.  W.  It  has 
standardized  anarchy,  put  a  premium  on  destruction; 
imposed  a  penalty  on  prosperity.  It  is  the  new  Prus- 
sianism. 

As  I  watch  it  develop  over  here  I  recall  the  tragedy 
of  indecision  that  I  witnessed  in  Russia  in  that  great 
hour  when  the  Slav  democracy  was  young.  Kerensky, 
extraordinary  person  that  he  was,  personified  that  dan- 
gerous optimism  which  is  to-day  the  curse  of  America. 
He  sought  to  coddle  and  placate  the  Bolsheviki  and  all 
the  while  they  were  plotting  his  ruin.  He  could  see 
no  wrong  in  the  vultures  who  were  German-hired  and 


AMERICA'S  OPPORTUNITY  289 

German-paid.  Had  he  employed  machine  guns  instead 
of  diplomacy,  he  would  have  saved  that  precious  Rus- 
sian freedom  and  likewise  spared  the  world  a  year  of 
war. 

If  we  are  to  profit  by  his  tragic  mistake,  we  will 
crush  this  reptile  with  a  stern  hand.  The  forces  of  evil 
must  be  met  with  the  forces  of  might.  The  Bolsheviki, 
otherwise  the  I.  W.  W.,  needs  the  firing  squad  instead 
of  the  Federal  investigation.  Disloyalty  to  the  costly 
fruits  of  peace,  is  no  less  treacherous  than  disloyalty 
to  the  nation  at  war.  The  I.  W.  W.'s  of  to-day  are 
full  mates  to  the  spies  and  the  pro-Germans  of  yester- 
day. 

A  tariff  is  only  one  bar  to  German  economic  pene- 
tration. The  real  danger  lies  in  the  social  phase.  No 
obligation,  therefore,  that  we  owe  civilization  and  a 
permanent  peace  is  greater  than  the  censorship  of 
immigration.  We  must  erect  a  bulkhead  against  the 
tides  of  illicit  humanity  that  have  beaten  on  our  shores 
for  forty  years.  We  must  curb  the  long  abuse  of 
citizenship  and  national  hospitality.  The  "melting  pot" 
has  become  a  stewing  caldron  of  disloyalty.  The 
sooner  we  convert  this  "melting  pot"  into  a  straining 
pot  the  better  off  we  will  be. 

Certain  eminent  financiers  who  delayed  their  first- 
hand "war  investigations"  until  the  signing  of  the 
armistice  assured  a  reasonable  degree  of  safety  on  the 
sea,  have  returned  home  filled  with  heavy  forebodings 
concerning  Europe's  financial  future.  Had  they  seen 
the  gradual  break-up  of  credit  during  the  war  they 


290  PEACE  AND  BUSINESS 

would  not  have  had  such  a  rude  shock,  nor  dissemin- 
ated such  gloom. 

They  are  correct  to  the  extent  that  Europe  is  well- 
nigh  bankrupt  and  that  we  are  the  only  solvent  nation. 
But  France  and  Italy — like  Russia — must  be  permit- 
ted to  work  out  their  own  salvation,  each  in  her  own 
way.  Merely  lending  them  more  money  will  not  in- 
stantly convert  ruin  into  prosperity. 

The  real  key  to  European  economic  regeneration 
lies  in  an  elastic  credit  and  the  interchange  of  com- 
modities. In  the  permanent  expansion  of  our  foreign 
trade  and  a  legitimate  American  banking  system  over- 
seas lies  the  real  salvation  of  war-ridden  Europe. 

During  the  war  I  was  privileged  to  see  the  great 
things.  I  saw  the  British  Grand  Fleet  in  battle  order 
break  through  the  mist  and  murk  of  the  Scotch  Coast, 
a  memorable  picture  of  imperial  power;  I  beheld  the 
high  tide  of  French  valor  ride  the  storms  of  glory  at 
Verdun;  up  and  down  the  blood-soaked  Somme  I 
looked  upon  the  deathless  sacrifice  of  Haig's  incom- 
parable armies;  I  witnessed  the  charge  of  Cadorna's 
intrepid  hosts  along  the  death-scarred  slopes  of  the 
Alps;  on  half  a  dozen  fields  I  gazed  on  Pershing's  men 
— the  bravest  of  the  brave — as  they  registered  an  im- 
perishable heroism. 

Out  of  all  this  contact  with  the  stark  and  naked 
actuality  of  war  is  born  a  solemn  conviction  that  bears 
on  this  troubled  hour  of  revision  and  readjustment. 
It  is  this : — the  war  was  a  Giant  Plowshare  that  up- 
rooted the  universe.    Now,  in  that  vast  furrow,  is  the 


AMERICA'S  OPPORTUNITY  291 


time  of  the  great  seeding.  As  we  plant  to-day  so  will 
all  posterity  reap.  The  world  lies  molten  for  a  recast- 
ing. We  are  no  longer  an  aloof  and  isolated  people. 
We  cast  our  fortunes,  our  manhood,  and  our  honor 
into  the  crucible;  we  have  emerged  reborn  from  the 
fires  of  faith  and  sacrifice  and  with  all  the  larger  obli- 
gations that  attach  to  that  remaking. 

The  kinships  of  to-day  are  the  kinships  that  will 
endure.  For  us  there  is  but  one  binding  bond,  and  that 
bond  is  with  those  blood  comrades  of  the  heroic  days, 
with  that  people  born  of  our  common  sire  and  which 
speaks  our  common  tongue — Britain. 

When  you  have  watched  the  Union  Jack  and  the 
Stars  and  Stripes  break  out  from  the  fighting  tops  of 
the  Grand  Fleet;  when  you  have  heard  London  cheer 
the  march  of  armed  American  troops  through  her 
streets;  when  you  have  seen  the  doughboy  and  the 
Tommy  fighting  side  by  side  on  the  fields  of  France, 
you  realize  that  at  last  the  Anglo-Saxons  have  come  to- 
gether for  a  union  that  is  the  most  precious  product 
of  the  War  of  Wars.  In  that  heritage  lies  the  hope  of 
the  world.  It  is  the  League  of  Leagues — the  real 
Covenant  of  high  faith  and  permanent  purpose. 

International  Business  will  henceforth  be  projected 
on  an  unprecedented  scale  and  with  an  unparalleled 
vigor.  Germany  will  test  every  resource  to  rehabili- 
tate her  trade.  The  universal  markets  must  be  policed 
to  prevent  abuse,  and  the  English-speaking  nations 
must  provide  that  stewardship.  They  took  up  arms 
for  the  sake  of  an  ideal ;  they  emerged  into  the  struggle 


292  PEACE  AND  BUSINESS 

with  no  lust  of  land.  They  have  a  common  commercial         I 
cause  no  less  vital  to  the  integrity  of  civilization  than 
their  common  racial  destiny. 

They  must  be  the  arbiters  of  the  economic  regenera- 
tion. 


THE  END 


This  book  is  DUE  on  the  last  date  stamped  helow 

2  3  1932 


Form  L-9-35jic8,'28 


i 


HC57 
M33p 


Marcosson  - 

-peace  ^tnd — 
"business. 


UC  SOUTHERN  RFGIONAL  LIBRARY  FACILITY 


AA    000  604  578 


BPVERSITY  oi  CALlKUia>ii^ 
AT 
LOS  ANGELAS 
LIBRAJRY 


